Stock Market Glossary

		Investment Forums
Site Rules

Learn about the ins and outs of the stock market. Know your way around the basic stock market terms and be a wiser stock market investor. Here's a list from A-Z:

A

Accumulation

This refers to acquisition of stocks in large volumes by some institutions. Accumulation may be behind the rise in stock prices as the volume increases and the prices fall with the decrease in volume.

Advance/Decline Line

Also known as AD Line, it is used as an indicator for the extent of advancement or decline in the stock market. The measurement is based on the difference between the advancing issues and the declining issues. The AD Line may also indicate strength or weakness.

Agent

A securities firm or broker who trades stocks or other security instruments for a client is known as an agent.

All or None

This is an order for the trading of stocks that must be filled out so the buy and sell may take place.

Alpha

It is a measurement of the actual performance based on the anticipated risk level. A negative Alpha means that the investment was not properly rewarded for the risks it has taken. A positive, meanwhile, indicates a bigger return that qualifies all risks involved.

Arbitrage

This involves the trading of securities with price disparities in different markets. This could be an advantage to investors who can sell the securities at a higher price in a different market.

Ask

The price investors are asked to pay or simply the offer for buying stocks.

At The Close

Price of the stock before the market closed, which may indicate the movement of the stock price at the end of the day.

At The Money

A term used to describe an option, which has the same strike price with the amount of an underlying equity, commodity, or index.

At-The-Open

Price of stock soon as the market opened for trading, which may also indicate the movement of the stock price through the difference with the closing price.

B

Bear Market

It is a period of decline when stock prices are dipping in value.

Bear Spread

A strategy used to maximize profit despite the price fall in underlying security. The one with lower strike price is sold, while investors buy higher strike prices.

Beta

It is the measurement between the prices of stocks and market performance or adjustment.

Bid

The price offered for selling a stock.

Breakout

A term used to describe the movement of a stock price that surpassed a previous high or made a new record for an initial low.

Bull Trap

A misconception that the stock price or index is climbing its way up when it's not.

Bull Spread

A strategy used to maximize profit by raising the price of underlying security. The lower strike price is bought, while the ones with a higher strike price are offered for a sale.

Butterfly Spread

It is the combination of bull spread and bear spread option strategies. Two lower strike prices are subjected under the bull spread strategy, while two higher strike prices are placed under the bull spread option.

C

Call

It is an option that may be exercised by the holder as a right to buy a stock at a certain price before expiration.

Channel

The parallel lines used when charting the high points and the low points. The channel can outline an upward or downward movement.

Consolidation

It is the term used for charting, which indicates that the price of stock for trading is not moving dramatically, either up or down.

Consumer Stock

These are companies, enlisted in the stock market, that manufacture and sell consumable products like food and beverages.

Convertible Security

This is a form of security, which may be converted into another form. It is used for convertible bonds or preferred stock, wherein a specific rate applies.

Cost Basis

The price measurement for buying a stock, which includes the amount you paid and the commission.

Confirmation

This occurs when indexes or indicators validate any change on the market. Stock traders use confirmation before they make decisions.

D

Day High

The peak or highest price the stock or security was able to achieve within the day.

Day Low

The lowest point the security or stock has reached within the day.

Day Order

It is a kind of order, which is only available for the day, used for a stock or option.

Delta

It refers to a ratio that indicates the measurement between the price movement of an option and the underlying security or interest.

Discount Broker

It is a kind of broker that offers limited services at a minimal cost. Discount brokers may take orders on behalf of investors.

Distribution

This refers to sales of stocks in large volumes by some institutions. Distribution may be behind the volume expansion as the price of stocks falls.

Divergence

This happens when indicators or indexes don't correspond with each other, which also serves as a warning either for increasing or declining prices in the near future.

E

Equities

These are common or preferred stocks that establish part ownership of the company.

Ex Dividend

Shareholders with ex dividend won't receive dividend checks or payment for the declared date but is entitled for future dividend shares.

Ex Right

Shareholders with ex rights may not exercise their rights until next or future company issues.

F

Fair Value

It outlines the value or worth of options as well as the futures contracts.

Flag

It is the price pattern that describes the sudden rise and pull back, creating a narrow price range.

Float

It refers to the available number of shares of stocks or security for trading, which are still open to the public.

G

Good Till Canceled

It is an open order that may only be executed once it's filled or canceled before expiration.

Good-Till-Date

It is a kind of open order that will only be executed by the broker once it's filled or until the system may automatically cancel the order based on the date specified.

H

Hedging

A strategy used to offset investment risks by taking several positions in securities.

Holding Period Return (HPR)

It refers to the return rate for holding an investment within a period of time.

Holder

A term used for people who purchased an option.

I

Implied Volatility

This measures the stock volatility or change in market rates over a period of time.

Index Option

It is an option that uses the index as an underlying security.

Inside Day

It refers to a trading day that sets a total price range within the previous day's range.

Insiders

These refer to people who have access to inside information about companies that offer stocks.

Insider Trading

It takes place when officers and members of the company trade their shares.

L

Limit Order

It is a form of instruction or request the investor puts on the order form to buy or sell stocks within a limited price.

Long

This refers to buying a stock or option.

M

Margin

This allows investors to use the money loaned by the broker to trade securities.

Margin Account

To use the margin or borrowed money from the broker, an account should be made or registered with the broker.

Margin Call

This is an instruction from the client to put money or other form security into a margin account.

Market Maker

This refers to licensed traders that help facilitate the buying and selling of stocks or other security options.

Market Not Held Order

This is an order from the investor that gives the floor trader full control on whether or not he will place the order or put it on hold.

Market Order

This is a formal instruction by the client to trade securities at a current price by placing an order.

N

Naked Puts

Naked puts are sold without taking into consideration whether or not the underlying security is owned by the investor.

O

Open

This indicates the price or rate of security at the opening of the trade.

Open Order

This is a blank order to trade securities that may be canceled at the end of the day.

Option

This is also known as the right to trade securities for a specific price within a period of time.

Overbought

This term is used to describe market prices that have risen at an incredible rate and time.

Oversold

This refers to market prices that have fallen deeply at an incredible rate and time.

P

Pay Date

It is a specified date wherein the company must pay the shareholders their dividend or stock split out.

Preferred Shares

This is another type of stock that provides fixed dividend to the company's shareholders.

Premium

This is the rate or price of option, listed on the exchange.

R

Record Date

It is a period of time wherein the stock must be included in your account or you won't be paid a dividend.

Relative Strength

This indicates the strength of a stock compared to other forms of securities.

Resistance

This refers to a difficult level wherein a stock may have trouble pushing through.

S

Settlement Date

This is a period of time where in trading of securities must be done or executed before expiration.

Spread

This refers to the disparity between the ask prices and bid offers for stocks and other options.

Stock Split

This is an action taken by the company to increase the amount and number of shares through splits.

T

Technical Analysis

It is an evaluation tool used to outline the price, volume, and other indexes that will affect trading options and decisions.

Tick

It measures the performance of stocks trading within a period of time.

Trend Lines

These outline the movement of stock prices based on performance.

Trending Market

It describes a market wherein prices tend to move in a similar pattern or direction.

U

Upside Breakout

This term is used to describe what happens when a stock exceeds resistance even when it has consolidated or formed its own base.

V

Volatile

It describes a condition wherein rates may fluctuate or change

Volatility

It measures the change in market rates or security fluctuations that extend over a period of time.

Volume

It is the total number of shares of a stock or security, which are traded daily.

W

Warrant

It is a form of long-term security that allows purchase of shares at a fixed rate within a certain period.

Write

Write means to sell an option, wherein the seller of the options is also known as the writer.

All times are GMT. The time now is 06:12 PM.