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Every term explained in plain English.
109 terms
401(k)
A retirement account through your job, often with free matching money
52-Week High
The highest price a stock has been in the last year
After-Hours Trading
Trading after the market closes at 4 PM ET
Analyst Consensus
The average opinion of professional stock analysts
Average True Range
How much a stock typically moves in a day
Balance Sheet
A snapshot of everything a company owns and owes
Bear Market
When stocks are falling
Beta
How much a stock moves compared to the overall market
Bid-Ask Spread
The gap between what buyers offer and what sellers want
Black Swan
A rare, unpredictable event that causes massive market disruption
Blue Chip Stock
A large, stable, well-known company with a long track record
Bollinger Bands
Lines around a stock's price showing its normal range
Bond
A loan you give to a company or government that pays you interest
Book Value
What a company is worth on paper if you sold everything and paid all debts
Breakout
When a stock bursts above a resistance level
Broker
The app or platform where you buy stocks
Bull Market
When stocks are going up
Buy and Hold
Buy stocks and keep them for years
Buyback
When a company buys back its own shares
Call Option
A contract giving you the right to buy a stock at a set price
Candlestick
A chart shape that shows a stock's price movement in a time period
Compound Interest
Earning returns on your returns — the reason starting early beats investing more later
Concentration Risk
Too much money in one stock, sector, or asset type
Contrarian Investing
Buying what everyone else is selling, and selling what everyone is buying
Correlation
How closely two investments move together
Counterparty Risk
The risk that the other side of a deal can't hold up their end
Covered Call
Selling someone else the right to buy your stock at a higher price
Credit Rating
A grade for how likely a borrower is to repay their debt
Cup and Handle
A bullish chart pattern shaped like a coffee cup
Day Trading
Buying and selling stocks within the same day
Death Cross
A bearish signal when a short-term average falls below a long-term one
Debt-to-Equity
How much a company borrowed vs. what it actually owns
Diversification
Not putting all your eggs in one basket
Dividend
Cash a company pays you just for owning their stock
Dividend Growth Investing
Investing in companies that consistently grow their dividend every year
Dollar-Cost Averaging
Invest a fixed amount every month no matter what
Double Bottom
A "W" shaped pattern that signals a potential reversal upward
Drawdown
How much your investment dropped from its peak
DRIP
Automatically reinvesting dividends to buy more shares
Earnings Report
A company's quarterly report card
EBITDA
Earnings before interest, taxes, depreciation, and amortization
EPS
How much profit a company makes per share
ETF
A basket of many stocks in one
Expiration Date
The last day an option can be used
Federal Reserve
The US central bank that controls interest rates and the money supply
Fibonacci Retracement
Key price levels where a stock might pause or reverse
Forward P/E
P/E ratio based on expected future earnings, not past ones
Free Cash Flow
Actual cash left after all expenses
Gap Up / Gap Down
When a stock opens much higher or lower than it closed
Going Long
Buying a stock expecting it to go up
Golden Cross
A bullish signal when a short-term average crosses above a long-term one
Gross Margin
Revenue left after subtracting the direct cost of making the product
Growth Investing
Buying companies growing fast even if expensive
Guidance
A company's prediction for their own future performance
Head and Shoulders
A chart pattern that often signals a trend reversal
Hedge
An investment that offsets losses in another
Implied Volatility
The market's expectation of how much a stock will move
Index
A scoreboard for a group of stocks
Index Investing
Buying funds that track the whole market instead of picking stocks
Inflation
Prices rising over time, making your money worth less
Insider Trading (Legal)
Tracking what company executives are buying
IPO
When a company goes public for the first time
Leverage
Using borrowed money or financial instruments to amplify your investment
Limit Order
Buy or sell only at a specific price or better
Liquidity
How easy it is to buy or sell something quickly
MACD
A momentum indicator showing when a trend might be changing
Margin
Borrowing money from your broker to buy more stocks
Market Cap
Total value of a company
Market Order
Buy or sell immediately at whatever price is available
Momentum Investing
Buying stocks that are already going up
Moving Average
The average price of a stock over a set number of days
Mutual Fund
A pool of money from many investors managed by a professional
Operating Income
Profit from the core business before taxes and interest
P/E Ratio
How expensive a stock is compared to its profits
Penny Stock
A very cheap stock, usually from a tiny or risky company
Portfolio
All your investments together
Position Sizing
Deciding how much of your money to put in one stock
Pre-Market Trading
Trading that happens before the market officially opens
Price-to-Book (P/B)
Stock price vs. the company's net assets
Price-to-Sales (P/S)
How much investors pay for each dollar of a company's revenue
Profit Margin
What percentage of revenue becomes actual profit
Put Option
A contract giving you the right to sell a stock at a set price
Rebalancing
Adjusting your portfolio back to your target allocation
REIT
A company that owns real estate you can buy like a stock
Resistance Level
A price where a stock tends to stop rising
Return on Equity
How efficiently a company uses shareholder money to make profit
Revenue
Total money a company brings in
Risk/Reward Ratio
Comparing how much you could lose vs. how much you could gain
Roth IRA
A retirement account you fund with after-tax money and withdraw from tax-free
RSI
A score (0–100) showing if a stock is overbought or oversold
Sector
A group of companies in the same type of business
Sector Rotation
Moving money between sectors depending on the economic cycle
Share
One unit of a stock
Short Interest
How many people are betting a stock will fall
Short Selling
Betting that a stock will go down
Stock
A tiny piece of ownership in a company
Stock Split
When a company divides its shares into more, cheaper pieces
Stop Loss
An automatic sell order if a stock drops too much
Strike Price
The price at which an option lets you buy or sell
Support Level
A price where a stock tends to stop falling
Swing Trading
Holding stocks for days to weeks to capture medium-term moves
Tax-Loss Harvesting
Selling losing investments to reduce your tax bill
Ticker Symbol
The short code used to identify a stock
Value Investing
Buying stocks that are cheaper than they're worth
Volatility
How wildly a stock's price swings
Volume
How many shares were traded today
Working Capital
A company's short-term financial cushion
Yield
The income you earn on an investment as a percentage
Yield Curve
A graph showing interest rates at different loan lengths