Stock Market Definitions

Updated: Jun 11, 2026

This dictionary explains common investing terms used in stocks, ETFs, options, and portfolio management.

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108 terms available.

52-Week High

Price Action

The highest price a stock has traded at over the last 12 months.

52-Week Low

Price Action

The lowest price a stock has traded at over the last 12 months.

ADR

Global Investing

An American Depositary Receipt lets investors buy shares of foreign companies on US exchanges.

Alpha

Performance

A measure of investment performance compared with a benchmark after adjusting for risk.

Annual Report

Company Financials

A yearly company filing that summarizes financial results, operations, and business strategy.

Ask Price

Trading

The lowest price a seller is willing to accept for a stock or other security.

Asset Allocation

Portfolio Management

How a portfolio is split across asset classes like stocks, bonds, and cash.

AUM

Funds

Assets Under Management, the total market value of investments managed by a fund or firm.

Averaging Down

Trading Strategy

Buying more shares at lower prices to reduce your average cost per share.

Bear Market

Market Conditions

A broad market decline, often defined as a drop of 20 percent or more from recent highs.

Beta

Risk

A measure of how much a stock tends to move compared with the overall market.

Bid Price

Trading

The highest price a buyer is willing to pay for a security.

Bid-Ask Spread

Trading

The difference between the bid price and ask price, often a cost of trading.

Blue-Chip Stock

Stock Types

A large, established company with a strong track record and stable finances.

Book Value

Valuation

A company's assets minus liabilities, shown on the balance sheet.

Breakout

Technical Analysis

When price moves above resistance or below support with momentum.

Bull Market

Market Conditions

A market period where prices trend upward for an extended time.

Buy and Hold

Investing Strategy

A long-term approach where investments are kept through short-term market swings.

Call Option

Options

A contract giving the buyer the right, but not the obligation, to buy an asset at a set price before expiration.

Candlestick Chart

Technical Analysis

A chart style that shows open, high, low, and close prices for each period.

Capital Gain

Tax

Profit earned when an investment is sold for more than its purchase price.

Cash Flow

Company Financials

Money moving into and out of a business, tracked in cash flow statements.

Circuit Breaker

Market Structure

A temporary trading halt triggered by large market moves to reduce panic volatility.

Common Stock

Stock Types

Standard company shares that often carry voting rights and potential dividends.

Compounding

Investing Basics

Earning returns on previous returns over time, which can accelerate growth.

Contrarian Investing

Investing Strategy

A strategy that buys when sentiment is very negative and sells when optimism is extreme.

Convertible Bond

Bonds

A bond that can be converted into company shares under specific terms.

Correlation

Risk

A statistic showing how two investments move relative to each other.

Cost Basis

Tax

The original value of an investment used to calculate capital gains or losses.

Covered Call

Options

An options strategy where you sell call options on shares you already own.

Day Order

Trading

An order that remains active only during the current trading day.

Day Trading

Trading Strategy

Buying and selling securities within the same day to capture short-term price moves.

Debt-to-Equity Ratio

Financial Ratios

A leverage ratio comparing a company's total debt to shareholder equity.

Defensive Stock

Stock Types

A stock from sectors that tend to hold up better during weak economic periods.

Delisting

Market Structure

Removal of a stock from an exchange due to rule violations, mergers, or voluntary exits.

Delta

Options Greeks

The amount an option's price is expected to change for a $1 move in the underlying asset.

Derivative

Derivatives

A financial contract whose value is based on an underlying asset, index, or rate.

Dilution

Company Financials

A reduction in ownership percentage when a company issues more shares.

Dividend

Income Investing

A cash payment from a company to shareholders, often made quarterly.

Dividend Aristocrat

Income Investing

A company known for long, consistent dividend growth over many years.

Dividend Yield

Income Investing

Annual dividend per share divided by share price, expressed as a percentage.

Dollar-Cost Averaging

Investing Strategy

Investing fixed amounts at regular intervals to reduce timing risk.

Drawdown

Risk

The decline from a portfolio or stock peak to its next low point.

DRIP

Income Investing

A Dividend Reinvestment Plan automatically uses dividends to buy more shares.

Earnings Per Share (EPS)

Financial Ratios

Company net income divided by the number of outstanding shares.

Earnings Season

Market Events

Periods when many public companies release quarterly financial results.

Economic Moat

Company Analysis

A durable competitive advantage that helps a company protect profits over time.

Enterprise Value (EV)

Valuation

Market capitalization plus debt minus cash, used to value the whole business.

ETF

Funds

An Exchange-Traded Fund that holds many assets and trades like a stock.

Ex-Dividend Date

Income Investing

The first day a stock trades without the next dividend attached.

Expense Ratio

Funds

The annual fee a fund charges investors, shown as a percentage of assets.

Face Value

Bonds

The amount a bond pays back at maturity, also called par value.

Fair Value

Valuation

An estimate of what an asset is worth based on analysis, not market price alone.

Fundamental Analysis

Analysis Methods

Evaluating investments using business quality, financial statements, and valuation.

Futures Contract

Derivatives

A standardized agreement to buy or sell an asset at a set future date and price.

Gamma

Options Greeks

Measures how quickly an option's delta changes as the underlying price moves.

Growth Stock

Stock Types

A company expected to grow earnings faster than the market average.

Hedge

Risk Management

An offsetting position used to reduce potential losses in another investment.

Index Fund

Funds

A fund designed to track the performance of a market index.

Insider Trading

Regulation

Trading based on material non-public information, often illegal when done improperly.

Interest Rate Risk

Risk

The risk that changing interest rates affect bond prices and some stock valuations.

Intrinsic Value

Valuation

An estimate of an asset's true worth based on future cash flows and fundamentals.

IPO

Market Events

Initial Public Offering, when a private company first sells shares to public investors.

Limit Order

Trading

An order to buy or sell at a specified price or better.

Liquidity

Trading

How easily an asset can be bought or sold without strongly moving the price.

Long Position

Trading

Owning an asset with the expectation that its price will rise.

Margin

Trading

Borrowed money from a broker used to buy securities.

Margin Call

Trading

A broker demand for more funds when account equity falls below required levels.

Market Capitalization

Valuation

A company's share price multiplied by total shares outstanding.

Market Order

Trading

An order executed immediately at the best available current price.

Momentum Investing

Investing Strategy

A strategy that buys assets with strong recent performance trends.

Mutual Fund

Funds

A pooled investment fund priced once daily, managed actively or passively.

NAV

Funds

Net Asset Value, the per-share value of a fund's assets minus liabilities.

Options

Derivatives

Contracts that give rights to buy or sell an underlying asset at a strike price before expiration.

P/B Ratio

Financial Ratios

Price-to-Book ratio, share price divided by book value per share.

P/E Ratio

Financial Ratios

Price-to-Earnings ratio, share price divided by earnings per share.

Portfolio Rebalancing

Portfolio Management

Adjusting holdings to return a portfolio to target asset allocation weights.

Preferred Stock

Stock Types

Shares that usually pay fixed dividends and rank above common shares in claims.

Price Target

Analysis Methods

An analyst estimate of where a stock may trade in the future.

Put Option

Options

A contract giving the buyer the right to sell an asset at a set price before expiration.

Quantitative Easing

Macro

Central bank bond purchases intended to support liquidity and lower long-term rates.

REIT

Funds

A Real Estate Investment Trust that owns or finances income-producing real estate.

Resistance

Technical Analysis

A price level where selling pressure has historically limited further gains.

Return on Equity (ROE)

Financial Ratios

Net income divided by shareholder equity, showing how efficiently capital is used.

Risk Tolerance

Risk

How much volatility and potential loss an investor can accept.

Sector

Market Structure

A group of companies in a similar part of the economy, such as energy or technology.

Share Buyback

Company Financials

When a company repurchases its own shares, reducing shares outstanding.

Sharpe Ratio

Performance

A risk-adjusted return metric that compares excess return to volatility.

Short Interest

Trading

The number of shares currently sold short and not yet covered.

Short Selling

Trading

Borrowing and selling shares to profit if the price declines.

Slippage

Trading

The difference between expected trade price and actual execution price.

Stop-Loss Order

Trading

An order that triggers when price reaches a set level to help limit losses.

Strike Price

Options

The fixed price at which an option can be exercised.

Support

Technical Analysis

A price level where buying pressure has historically helped prevent further declines.

Swing Trading

Trading Strategy

A strategy that aims to capture multi-day or multi-week price swings.

Technical Analysis

Analysis Methods

Evaluating securities using price charts, trends, and trading indicators.

Theta

Options Greeks

Measures how much value an option loses as time passes, all else equal.

Ticker Symbol

Market Structure

A short code used to identify a publicly traded security on an exchange.

Time in Force

Trading

The length of time an order stays active, such as day or good-till-cancelled.

Total Return

Performance

Overall investment return including price change and income like dividends.

Trailing Stop

Trading

A stop order that moves with price to lock in gains while limiting downside.

Value Stock

Stock Types

A stock that appears cheap relative to fundamentals such as earnings or book value.

Vega

Options Greeks

Measures how much an option price changes when implied volatility changes.

Volatility

Risk

How much and how quickly prices move up and down over time.

Volume

Trading

The number of shares or contracts traded during a period.

WACC

Corporate Finance

Weighted Average Cost of Capital, the blended cost of debt and equity financing.

Yield Curve

Macro

A graph of interest rates across different bond maturities.

Zero-Coupon Bond

Bonds

A bond sold at a discount that pays no periodic interest and matures at face value.