Financial Glossary
Plain-English definitions for investing, trading, and market terms.
1
A
Absolute Valuation
Valuing a company based solely on its fundamentals without peer comparison.
Accounts Payable
Money the company owes to suppliers for goods or services received.
Accounts Receivable
Money owed to the company by customers for goods or services delivered.
Accredited Investor
An individual or entity meeting SEC criteria for investing in certain unregistered securities.
Accruals Ratio
The portion of earnings not backed by operating cash flow.
Accrued Interest
Interest earned on a bond since the last coupon payment.
Accumulated Depreciation
The total depreciation charged against fixed assets over time.
Accumulation/Distribution Line
A volume-based indicator showing money flowing into or out of a stock.
Acquisition
One company purchasing a controlling stake in another company.
Active Management
Investment approach where managers select securities to beat a benchmark.
ADR (American Depositary Receipt)
A U.S.-traded certificate representing shares of a foreign company.
After-Hours Trading
Trading that occurs after regular market hours, typically 4 PM to 8 PM ET.
Agency Bond
Bonds issued by government-sponsored enterprises like Fannie Mae.
Algorithmic Trading
Using computer programs to automatically execute trading strategies.
All or None (AON)
An order that must be filled completely or not at all, but without immediate execution requirement.
Alpha
The excess return of an investment relative to a benchmark index.
American Option
An option that can be exercised any time before expiration.
Amortization
The gradual expensing of intangible assets or loan principal over time.
Analyst Rating
A research analyst's recommendation on whether to buy, hold, or sell a stock.
Anchoring Bias
Over-relying on the first piece of information encountered when making decisions.
Annual Report (10-K)
A comprehensive yearly report of a company's business and financials.
Ascending Triangle
A bullish pattern with flat resistance and rising support.
Ask Price
The lowest price a seller is willing to accept for a security.
Asset Allocation
The strategic distribution of investments across different asset classes.
Asset Turnover
Revenue generated per dollar of assets.
At The Money (ATM)
An option where the strike price equals the current stock price.
Attribution Analysis
Breaking down portfolio returns into their component sources.
Average Directional Index (ADX)
An indicator measuring trend strength regardless of direction.
Average True Range (ATR)
A volatility indicator measuring the average range of price movement.
B
Backlog
The value of orders received but not yet fulfilled.
Balance Sheet
A financial statement showing assets, liabilities, and equity at a point in time.
Basic Shares Outstanding
The actual number of shares currently issued and held by investors.
Basis Point
A unit equal to 0.01%, commonly used to measure interest rate changes.
Bear Flag
A bearish continuation pattern with a sharp decline followed by an upward-sloping consolidation.
Bear Market
A market condition where prices are falling or expected to fall.
Bear Pennant
A bearish continuation pattern with a sharp decline followed by converging trendlines.
Bearish Engulfing Pattern
A two-candle bearish reversal where the second candle completely engulfs the first.
Benchmark
A standard against which investment performance is measured.
Best Bid and Offer (BBO)
The highest bid and lowest ask prices available in the market.
Beta
A measure of a stock's volatility relative to the overall market.
Bid Price
The highest price a buyer is willing to pay for a security.
Bid-Ask Spread
The difference between the highest bid price and lowest ask price for a security.
Black-Scholes Model
A mathematical model for pricing European options.
Block Trade
A large privately negotiated securities transaction.
Blue Chip Stocks
Shares of large, established, financially sound companies with excellent reputations.
Bollinger Bands
Volatility bands placed above and below a moving average.
Bond
A fixed-income security representing a loan made by an investor to a borrower.
Bond Default
When a bond issuer fails to make required interest or principal payments.
Bond ETF
An exchange-traded fund that invests in a portfolio of bonds.
Bond Fund
A mutual fund or ETF that invests primarily in fixed-income securities.
Bond Ladder
A portfolio of bonds with staggered maturity dates.
Book Value
The net asset value of a company based on its balance sheet.
Bracket Order
A three-part order with entry, profit target, and stop-loss.
Break-Even Point
The sales level where total revenue equals total costs.
Breakaway Gap
A gap that occurs at the start of a new trend, breaking through support or resistance.
Breakeven Inflation Rate
The inflation rate at which TIPS and nominal Treasuries provide equal returns.
Bull Flag
A bullish continuation pattern with a sharp rise followed by a downward-sloping consolidation.
Bull Market
A market condition where prices are rising or expected to rise.
Bull Pennant
A bullish continuation pattern with a sharp rise followed by converging trendlines.
Bullish Engulfing Pattern
A two-candle bullish reversal where the second candle completely engulfs the first.
Butterfly Spread
A neutral strategy combining bull and bear spreads with a shared middle strike.
Buy and Hold
A long-term strategy of purchasing securities and holding them regardless of fluctuations.
Buy to Cover
Purchasing shares to close out a short position.
Buyback
A company repurchasing its own shares from the open market.
Buyback Yield
The percentage of market cap returned through share repurchases.
C
Calendar Spread
An options spread using same strike but different expiration dates.
Call Option
A contract giving the holder the right to buy an asset at a specified price.
Callable Bond
A bond that can be redeemed by the issuer before maturity.
Calmar Ratio
A ratio comparing average annual return to maximum drawdown.
Candlestick Patterns
Visual patterns on price charts used to predict future price movements.
CAPE Ratio (Shiller P/E)
Cyclically Adjusted P/E using 10-year average inflation-adjusted earnings.
Capital Expenditure
Funds used to acquire, upgrade, or maintain physical assets like property or equipment.
Capital Expenditures (CapEx)
Spending on fixed assets like property, equipment, and facilities.
CAPM (Capital Asset Pricing Model)
A model that describes the relationship between risk and expected return.
Carbon Footprint
Total greenhouse gas emissions caused directly and indirectly by a company.
Carry Trade
Borrowing at low rates to invest in higher-yielding assets.
Cash Conversion Cycle (CCC)
Days between paying for inventory and collecting from customers.
Cash Flow Statement
A financial statement showing cash movements from operations, investing, and financing.
Cash Flow to Net Income Ratio
Operating cash flow divided by net income.
Chaikin Oscillator
The difference between 3-day and 10-day EMAs of the A/D line.
Circuit Breaker
Automatic trading halts triggered by severe market declines to prevent panic selling.
Closed-End Fund
A fund that issues a fixed number of shares that trade on exchanges.
Collar Strategy
A protective strategy combining a covered call with a protective put.
Combined Leverage (Total Leverage)
The combined effect of operating and financial leverage.
Commodities
Raw materials or primary agricultural products that can be traded.
Commodity Channel Index (CCI)
An oscillator measuring price deviation from its statistical mean.
Comparable Company Analysis (Comps)
Valuation method comparing a company to similar publicly traded peers.
Confirmation Bias
The tendency to seek information that confirms existing beliefs while ignoring contradictory evidence.
Consensus Estimate
The average of analyst forecasts for a company's earnings or revenue.
Consumer Confidence
A measure of optimism that consumers have about the economy and their financial situation.
Consumer Price Index (CPI)
A measure tracking changes in the prices paid by consumers for a basket of goods and services.
Contingent Liabilities
Potential obligations depending on future uncertain events.
Contrarian Investing
A strategy of going against prevailing market sentiment.
Contribution Margin
Revenue minus variable costs, available to cover fixed costs and profit.
Convertible Bond
A bond that can be converted into a specified number of company shares.
Convexity
A measure of the curvature in the relationship between bond prices and yields.
Corporate Bond
A debt security issued by a company to raise capital.
Corporate Bond Spread
The yield premium corporate bonds pay over government bonds.
Corporate Governance
The system of rules and practices directing and controlling a company.
Correlation
A statistical measure of how two investments move in relation to each other.
Cost of Goods Sold (COGS)
Direct costs of producing goods or services sold.
Country Risk
The risk associated with investing in a particular country.
Coupon Rate
The annual interest rate paid on a bond based on its face value.
Covariance
A measure of how two assets move together directionally.
Covered Call
An options strategy where you sell calls against stock you own.
Credit Rating
An assessment of a borrower's creditworthiness by rating agencies.
Credit Spread
An options spread where you receive a net premium when opening.
Credit Spread (Bonds)
The yield difference between a corporate bond and a similar-maturity Treasury.
Cup and Handle Pattern
A bullish continuation pattern resembling a cup with a handle.
Currency Risk
The risk that exchange rate changes will affect investment returns.
Current Assets
Assets expected to be converted to cash within one year.
Current Liabilities
Obligations due within one year.
Current Yield
A bond's annual coupon payment divided by its current market price.
Cyclical Stocks
Stocks whose performance is closely tied to economic cycles.
Market Correction
A decline of 10% or more in asset prices from recent highs.
D
Dark Pool
A private exchange where institutional investors trade large blocks anonymously.
Day Order
An order that expires at the end of the trading day if not executed.
Day Trading
Buying and selling securities within the same trading day.
DCF Valuation (Discounted Cash Flow)
A valuation method that discounts projected future cash flows to present value.
Debit Spread
An options spread where you pay a net premium when opening.
Debt Service Coverage Ratio (DSCR)
Operating income divided by total debt payments.
Debt-to-Equity Ratio
A leverage ratio comparing total debt to shareholders' equity.
Deep Value Investing
An extreme value approach buying severely undervalued stocks regardless of quality.
Defensive Stocks
Stocks of companies providing essential goods and services that remain stable during economic downturns.
Deferred Revenue
Cash received for goods or services not yet delivered.
Delta (Options Greek)
Measures how much an option price changes for a $1 move in the underlying.
Depreciation
The systematic allocation of an asset's cost over its useful life.
Descending Triangle
A bearish pattern with flat support and falling resistance.
Diluted Shares Outstanding
Share count including all potential shares from options, warrants, and convertibles.
Dilution
Reduction in existing shareholders' ownership percentage when new shares are issued.
Direct Indexing
Owning individual stocks to replicate an index rather than buying a fund.
Direct Listing
A way for companies to go public by selling existing shares without underwriters.
Disposition Effect
The tendency to sell winners too early and hold losers too long.
Dividend Aristocrat
An S&P 500 company that has increased dividends for 25+ consecutive years.
Dividend Capture Strategy
Buying stocks before ex-dividend date to collect the dividend.
Dividend Reinvestment
Automatically using dividend payments to purchase additional shares.
Dividend Yield
A financial ratio showing how much a company pays in dividends relative to its stock price.
Doji Candlestick
A candlestick where open and close are virtually equal, showing indecision.
Dollar-Cost Averaging
Investing fixed amounts at regular intervals regardless of market conditions.
Donchian Channel
A channel formed by the highest high and lowest low over n periods.
Donchian Channels
Channels showing the highest high and lowest low over a period.
Double Bottom
A bullish reversal pattern with two troughs at approximately the same level.
Double Top
A bearish reversal pattern with two peaks at approximately the same level.
DuPont Analysis
Breaking down ROE into margin, turnover, and leverage components.
Duration (Bond)
A measure of a bond's price sensitivity to interest rate changes.
DV01 (Dollar Value of 01)
The dollar change in value for a one basis point yield change.
E
Earnings Per Share (EPS)
A company's profit divided by the number of outstanding shares.
Earnings Quality
How well reported earnings reflect true economic performance.
Earnings Report
A quarterly financial statement detailing a company's revenues, expenses, and profits.
Earnings Surprise
The difference between actual earnings and the consensus estimate.
Earnings Yield
The inverse of P/E ratio, showing earnings as a percentage of stock price.
EBIT (Earnings Before Interest and Taxes)
Operating profit before financing costs and taxes.
EBITDA
Earnings before interest, taxes, depreciation, and amortization.
EBITDA Margin
EBITDA as a percentage of revenue.
Economic Cycle
The natural fluctuation between periods of economic expansion and contraction.
Economic Moat
Sustainable competitive advantages that protect a company's profits.
Economic Value Added (EVA)
Operating profit minus the cost of capital employed.
Efficient Frontier
The set of optimal portfolios offering maximum return for each risk level.
Emerging Markets
Developing economies with rapid growth but higher investment risk.
Enterprise Value (EV)
The total value of a company including equity and debt, minus cash.
Equity Risk Premium
The excess return investing in stocks provides over the risk-free rate.
ESG Investing
Investment approach considering environmental, social, and governance factors.
European Option
An option that can only be exercised at expiration.
EV/EBITDA
A valuation multiple comparing enterprise value to earnings before interest, taxes, depreciation, and amortization.
EV/Sales (EV/Revenue)
A valuation multiple comparing enterprise value to total revenue.
Evening Star Pattern
A three-candle bearish reversal pattern signaling the end of an uptrend.
Ex-Dividend Date
The date on which a stock begins trading without the right to receive the declared dividend.
Exchange-Traded Fund (ETF)
An investment fund traded on stock exchanges that holds a basket of assets.
Exercise (Options)
When an option holder uses their right to buy or sell the underlying asset.
Expense Ratio
The annual fee charged by a fund expressed as a percentage of assets.
Expiration Date
The last day an option contract can be exercised.
Exponential Moving Average (EMA)
A moving average that gives more weight to recent prices.
F
Face Value (Par Value)
The nominal value of a bond that will be repaid at maturity.
Fair Value
The reasonable price for an asset based on agreed-upon valuation methods.
Falling Wedge
A bullish pattern with converging downward-sloping trendlines.
Federal Reserve
The central banking system of the United States responsible for monetary policy.
Fibonacci Extension
Levels beyond 100% used to project potential price targets.
Fibonacci Retracement
Horizontal lines indicating potential support/resistance based on Fibonacci ratios.
Fiduciary
A person or entity legally obligated to act in another's best interest.
Fiduciary Duty
A legal obligation to act in a client's best interest when managing their assets.
Fill (Order Fill)
The completion of an order to buy or sell a security.
Fill or Kill (FOK)
An order that must be executed immediately and completely, or canceled entirely.
Financial Leverage
The use of debt to amplify returns on equity.
Financing Cash Flow
Cash flows from debt, equity, and dividend transactions.
FINRA
The Financial Industry Regulatory Authority, a self-regulatory organization for broker-dealers.
Fixed Charge Coverage Ratio
Earnings available to cover all fixed financial obligations.
Float
The number of shares available for public trading.
Floating Rate Bond
A bond with interest payments that adjust based on a reference rate.
FOMO (Fear of Missing Out)
Anxiety-driven investing based on fear of missing profitable opportunities.
Form 10-K
The SEC annual report form required of all public companies.
Form 10-Q
The SEC quarterly report form filed three times per year.
Form 4
An SEC filing reporting insider stock transactions within two business days.
Form 8-K
An SEC filing for reporting significant events between regular filings.
Forward P/E Ratio
A valuation ratio using estimated future earnings instead of trailing earnings.
Fractional Shares
Ownership of less than one full share of stock.
Free Cash Flow (FCF)
Cash available after funding operations and capital expenditures.
Free Cash Flow Margin
Free cash flow as a percentage of revenue.
Frontier Markets
Smaller, less developed markets than emerging markets.
Futures Contract
A standardized agreement to buy or sell an asset at a future date and price.
G
Gamma (Options Greek)
Measures the rate of change in delta for a $1 move in the underlying.
Gap (Price Gap)
A price discontinuity where no trading occurs between two sessions.
Gap (Price Gap)
An area on a chart where no trading occurred between sessions.
GARP (Growth at a Reasonable Price)
An investment strategy seeking growth stocks that aren't overvalued.
Global Investing
Investment approach including both domestic and international securities.
Gold
A precious metal often used as a safe-haven investment.
Good-Til-Canceled (GTC)
An order that remains active until executed, canceled, or a broker-specified time limit.
Goodwill
An intangible asset representing the premium paid in acquisitions.
Graham Number
A fair value estimate based on Benjamin Graham's value investing principles.
Gross Domestic Product (GDP)
The total value of all goods and services produced within a country during a specific period.
Gross Margin
Gross profit as a percentage of revenue.
Gross Profit
Revenue minus the direct costs of producing goods or services.
Growth Investing
A strategy focused on companies expected to grow earnings faster than average.
Growth Stocks
Shares of companies expected to grow revenues and earnings faster than the market average.
Guidance
A company's forward-looking statements about expected future financial performance.
H
Hammer Candlestick
A bullish reversal pattern with a small body and long lower shadow.
Hanging Man
A bearish reversal pattern identical to hammer but appearing after an uptrend.
Harami Pattern
A two-candle pattern where the second candle is contained within the first.
Head and Shoulders Pattern
A reversal pattern with three peaks, the middle being highest.
Hedge Fund
A private investment fund using diverse strategies to generate returns.
Herding
Following the crowd's investment decisions rather than independent analysis.
High-Frequency Trading (HFT)
Automated trading using algorithms to execute orders in milliseconds.
High-Yield Bond (Junk Bond)
A bond rated below investment grade that offers higher yields due to higher risk.
Hindsight Bias
The tendency to believe past events were predictable after knowing the outcome.
Housing Starts
The number of new residential construction projects begun in a given period.
I
Ichimoku Cloud
A comprehensive indicator showing support, resistance, trend, and momentum.
Immediate or Cancel (IOC)
An order requiring immediate execution with any unfilled portion canceled.
Impact Investing
Investments made to generate positive social/environmental impact alongside returns.
Implied Volatility (IV)
The market's expectation of future price volatility implied by option prices.
In The Money (ITM)
An option with intrinsic value that would be profitable if exercised immediately.
Income Investing
A strategy focused on generating regular cash flow from dividends and interest.
Income Statement
A financial statement showing revenue, expenses, and profit over a period.
Index Fund
A fund designed to track the performance of a specific market index.
Index Investing
A passive strategy replicating the performance of a market index.
Inflation
The rate at which the general price level of goods and services rises over time.
Information Ratio
A measure of risk-adjusted active return relative to tracking error.
Infrastructure Investment
Investment in essential physical systems like transportation and utilities.
Insider Trading
Buying or selling securities based on material, non-public information.
Intangible Assets
Non-physical assets with economic value like patents and brands.
Interest Coverage Ratio
EBIT divided by interest expense, measuring debt service ability.
Interest Rate Risk
The risk that bond prices will fall when interest rates rise.
Interest Rates
The cost of borrowing money or the return for lending money, typically expressed as a percentage.
Interval Fund
A fund that periodically offers to repurchase shares at set intervals.
Intrinsic Value
The calculated true worth of a company based on fundamental analysis.
Inventory
Goods held for sale or materials used in production.
Inventory Turnover
How many times inventory is sold and replaced in a period.
Inverse Head and Shoulders
A bullish reversal pattern with three troughs, the middle being lowest.
Inverted Hammer
A potential bullish reversal with a small body and long upper shadow.
Inverted Yield Curve
When short-term interest rates exceed long-term rates, often signaling recession.
Investing Cash Flow
Cash used for or generated from investments and asset purchases.
Investment Grade
Bonds rated BBB- or higher, indicating relatively low default risk.
IPO (Initial Public Offering)
A company's first sale of stock to the public, transitioning from private to public ownership.
Iron Condor
A neutral options strategy combining a bull put spread and bear call spread.
IV Crush
A sudden drop in implied volatility after an anticipated event.
K
Keltner Channel
A volatility-based envelope set above and below an EMA.
Keltner Channels
Volatility-based bands using Average True Range instead of standard deviation.
Key Rate Duration
Sensitivity of a bond's price to changes at specific points on the yield curve.
L
Large-Cap
Companies with market capitalization typically above $10 billion.
LEAPS
Long-term options with expiration dates over one year away.
Leverage
Using borrowed capital or derivatives to increase potential investment returns.
Limit Order
An order to buy or sell a security at a specified price or better.
Liquidation Value
The estimated value if a company sold all assets and paid all debts.
Liquidity
The ease with which an asset can be bought or sold without significantly affecting its price.
Load Fund
A mutual fund that charges a sales commission when buying or selling.
Lock-Up Period
A period after an IPO when insiders are prohibited from selling their shares.
Lockup Period
Time after an IPO when insiders cannot sell their shares.
Long-Term Debt
Debt obligations due more than one year in the future.
Loss Aversion
The tendency to prefer avoiding losses over acquiring equivalent gains.
Low Volatility Factor
A factor strategy targeting stocks with lower price fluctuations.
M
MACD (Moving Average Convergence Divergence)
A trend-following momentum indicator showing the relationship between two moving averages.
Make-Whole Call
A call provision that compensates bondholders for early redemption.
Margin Call
A broker's demand for additional funds when account equity falls below maintenance requirements.
Margin of Safety
The discount between intrinsic value and purchase price that protects against errors.
Margin Trading
Borrowing money from a broker to purchase securities.
Market Capitalization
The total market value of a company's outstanding shares of stock.
Market Capitalization
The total market value of a company's outstanding shares.
Market Depth
The market's ability to sustain large orders without significant price impact.
Market Impact
The effect of a trade on a security's price.
Market Maker
A firm that continuously quotes buy and sell prices for a security, providing liquidity.
Market Order
An order to buy or sell a security immediately at the best available price.
Market Sentiment
The overall attitude of investors toward a market or security.
Market-On-Close (MOC)
An order to execute at the closing price of the trading day.
Market-On-Open (MOO)
An order to execute at the opening price of the trading day.
Marubozu Candlestick
A candlestick with no shadows, showing complete dominance by buyers or sellers.
Maturity Date
The date when a bond's principal is repaid and interest payments cease.
Maximum Drawdown
The largest peak-to-trough decline in portfolio value over a period.
Mean Reversion
The theory that prices tend to return to their historical average over time.
Merger
The combination of two companies into a single entity.
Mid-Cap
Companies with market capitalization typically between $2 billion and $10 billion.
Moat
A sustainable competitive advantage that protects a company from competitors.
Modern Portfolio Theory (MPT)
A framework for constructing portfolios to maximize return for a given risk level.
Momentum Factor
A factor strategy investing in stocks with strong recent performance.
Momentum Indicator
A measure of the rate of price change over a specific period.
Momentum Investing
A strategy of buying assets that have shown strong recent performance.
Money Flow Index (MFI)
A volume-weighted RSI that incorporates volume data.
Monte Carlo Simulation
A modeling technique using random sampling to predict outcomes.
Morning Star Pattern
A three-candle bullish reversal pattern signaling the end of a downtrend.
Mortgage-Backed Security (MBS)
A bond backed by a pool of mortgage loans.
Moving Average
An indicator that smooths price data by calculating the average over a specific period.
Multiple Contraction
When valuation multiples decrease, reducing stock prices even as earnings grow.
Multiple Expansion
When valuation multiples increase, boosting stock returns beyond earnings growth.
Municipal Bond
A debt security issued by state or local governments, often tax-exempt.
Mutual Fund
A professionally managed investment fund that pools money from many investors.
N
Naked Option
Selling an option without owning the underlying asset or offsetting position.
NAV Discount/Premium
The difference between market price and net asset value per share.
Negative Pledge
A covenant prohibiting the issuer from pledging assets to other creditors.
Net Asset Value (NAV)
A fund's total assets minus liabilities, divided by shares outstanding.
Net Income
The bottom line profit after all expenses, interest, and taxes.
Net Profit Margin
Net income as a percentage of revenue.
O
OAS (Option-Adjusted Spread)
A bond's spread over Treasuries adjusted for embedded options.
OBV (On-Balance Volume)
A cumulative volume indicator that relates volume to price changes.
Odd Lot
An order for fewer than 100 shares of stock.
Off-Balance-Sheet Items
Assets, liabilities, or financing not recorded on the balance sheet.
On-Balance Volume (OBV)
A cumulative volume indicator that relates volume to price change.
Open Interest
The total number of outstanding option contracts that have not been settled.
Operating Cash Flow
Cash generated from core business operations.
Operating Cycle
Time from purchasing inventory to collecting cash from sales.
Operating Income (EBIT)
Profit from core operations before interest and taxes.
Operating Leverage
The degree to which fixed costs amplify changes in operating income.
Operating Margin
Operating income as a percentage of revenue.
Option Assignment
When an option seller must fulfill the obligation of the contract.
Option Premium
The price paid to purchase an option contract.
Options Chain
A listing of all available option contracts for an underlying security.
Order Book
A list of all outstanding buy and sell orders for a security.
Out Of The Money (OTM)
An option with no intrinsic value that would not be profitable if exercised.
Overconfidence
Excessive belief in one's ability to predict markets or pick stocks.
P
P/B Ratio (Price-to-Book)
A valuation ratio comparing stock price to book value per share.
P/E Ratio (Price-to-Earnings)
A valuation ratio comparing a company's stock price to its earnings per share.
P/S Ratio (Price-to-Sales)
A valuation ratio comparing stock price to revenue per share.
Pairs Trading
A market-neutral strategy trading two correlated securities.
Paper Trading
Simulated trading using virtual money to practice without financial risk.
Parabolic SAR
A trend-following indicator that provides potential stop and reverse points.
Pari Passu
Legal term meaning equal ranking among creditors or securities.
Passive Investing
Investment strategy that tracks a market index rather than trying to beat it.
Pattern Day Trader
A trader who executes 4+ day trades within 5 business days.
Payables Turnover
How quickly a company pays its suppliers.
Payment for Order Flow (PFOF)
Compensation brokers receive for routing orders to specific market makers.
Payout Ratio
The percentage of earnings paid out as dividends.
PEG Ratio (Price/Earnings to Growth)
A valuation metric that adjusts P/E ratio by expected earnings growth rate.
Penny Stocks
Low-priced stocks of small companies, typically trading below $5 per share.
Pin Risk
The risk of uncertain assignment when stock closes near the strike at expiration.
Pivot Points
Calculated support and resistance levels based on previous period's prices.
Portfolio Diversification
Spreading investments across various assets to reduce risk.
Position Sizing
Determining how many shares or contracts to trade based on risk parameters.
Pre-Market Trading
Trading that occurs before regular market hours, typically 4 AM to 9:30 AM ET.
Precedent Transactions Analysis
Valuation method using multiples from past M&A deals in the same industry.
Prepayment Risk
The risk that borrowers will repay loans early, returning principal sooner than expected.
Price Action
The movement of a security's price plotted over time.
Price Target
An analyst's projected price for a stock over a specific time period.
Price-to-Cash-Flow Ratio
A valuation ratio comparing stock price to operating cash flow per share.
Price-to-Free-Cash-Flow
A valuation ratio comparing market cap to free cash flow.
Price-to-Tangible Book Value
A valuation ratio comparing stock price to tangible book value per share.
Private Equity
Investment in private companies or buyouts of public companies.
Protective Put
Buying a put option to protect against downside in a stock you own.
Proxy Voting
Voting on corporate matters by shareholders through a designated representative.
Put Option
A contract giving the holder the right to sell an asset at a specified price.
Q
QARP (Quality at a Reasonable Price)
An investment approach focusing on high-quality companies at fair valuations.
Qualified Dividend
A dividend taxed at lower capital gains rates rather than ordinary income rates.
Quality Factor
A factor strategy targeting financially strong, profitable companies.
Quantitative Easing (QE)
A monetary policy where central banks purchase assets to inject liquidity into the economy.
Quarterly Report (10-Q)
A quarterly filing with unaudited financials and business updates.
R
R-Squared
A statistical measure of how much a fund's movements can be explained by benchmark movements.
R&D Expense (Research & Development)
Spending on developing new products, services, or technologies.
Rate of Change (ROC)
The percentage change in price over a specific period.
Real Assets
Physical assets like real estate, commodities, and infrastructure.
Rebalancing
Periodically adjusting portfolio weights back to target allocations.
Receivables Turnover
How quickly a company collects payment from customers.
Recency Bias
Giving more weight to recent events when predicting the future.
Recession
A significant decline in economic activity lasting more than a few months.
Record Date
The date determining which shareholders are eligible to receive a dividend or vote.
Rectangle Pattern
A consolidation pattern with horizontal support and resistance.
Reg T Margin
Federal Reserve regulation setting initial margin requirements.
Regulation FD
SEC rule requiring companies to disclose material information to all investors simultaneously.
Reinvestment Risk
The risk that future cash flows will be reinvested at lower rates.
REIT
A company that owns, operates, or finances income-producing real estate.
Relative Strength Index (RSI)
A momentum indicator measuring the speed and magnitude of recent price changes.
Relative Valuation
Valuing a company by comparing its multiples to peers or historical averages.
Relative Volume (RVOL)
Current volume compared to the average volume for that time of day.
Replacement Value
The cost to replace a company's assets at current prices.
Residual Income
Net income minus a charge for the cost of equity capital.
Retained Earnings
Cumulative profits not distributed as dividends.
Return on Assets (ROA)
Net income as a percentage of total assets.
Return on Capital Employed
Operating profit relative to long-term capital invested.
Return on Capital Employed (ROCE)
EBIT as a percentage of capital employed in the business.
Return on Equity (ROE)
A measure of how effectively a company uses shareholders' equity to generate profits.
Return on Invested Capital (ROIC)
Operating profit relative to total capital invested in the business.
Return on Net Assets (RONA)
Net income relative to fixed assets and net working capital.
Revenue (Sales)
The total income from selling goods or services before any expenses.
Reverse Stock Split
A corporate action reducing shares outstanding while proportionally increasing the share price.
Rho (Options Greek)
Measures how much an option price changes for a 1% change in interest rates.
Rights Offering
An offering allowing existing shareholders to buy additional shares at a discount.
Rising Wedge
A bearish pattern with converging upward-sloping trendlines.
Risk-Free Rate
The theoretical return of an investment with zero risk.
Roll-Down Return
Bond return from price appreciation as it moves down the yield curve.
Round Lot
A standard trading unit of 100 shares.
S
Same-Store Sales
Revenue comparison for stores open at least one year.
Seasonality
Predictable patterns that repeat at regular time intervals.
SEC (Securities and Exchange Commission)
The U.S. federal agency responsible for regulating securities markets and protecting investors.
Secondary Offering
The sale of new or existing shares after a company's initial public offering.
Sector ETF
An ETF that focuses on a specific industry sector.
Sector Rotation
Shifting portfolio allocations between sectors based on economic cycles.
Settlement Date
The date when a securities transaction is completed.
SG&A (Selling, General & Administrative)
Operating expenses not directly tied to production.
Shareholder Yield
Total cash returned to shareholders through dividends and buybacks.
Shareholders' Equity
The residual value of assets after subtracting all liabilities.
Sharpe Ratio
Risk-adjusted return measuring excess return per unit of total risk.
Shooting Star
A bearish reversal with a small body at the low and long upper shadow.
Short Interest
The total number of shares of a stock that have been sold short.
Short Selling
Selling borrowed shares with the intention of buying them back at a lower price.
Short Squeeze
Rapid price increase forcing short sellers to buy shares to cover losses.
Short-Term Debt
Debt obligations due within one year.
Simple Moving Average (SMA)
An average of closing prices over a specific number of periods.
Sinking Fund
A fund set aside to gradually repay bond principal before maturity.
Size Factor (Small-Cap Premium)
The tendency for smaller companies to outperform larger ones over time.
Slippage
The difference between expected and actual execution price of a trade.
Small-Cap
Companies with market capitalization typically between $300 million and $2 billion.
Smart Beta
Index strategies using alternative weighting schemes beyond market cap.
Sortino Ratio
Risk-adjusted return measuring excess return per unit of downside risk only.
SPAC (Special Purpose Acquisition Company)
A shell company that raises capital through IPO to acquire a private company.
Special Dividend
A one-time dividend payment outside the regular distribution schedule.
Spin-Off
Creating an independent company by distributing shares of a subsidiary to existing shareholders.
Spread Duration
A measure of a bond's price sensitivity to changes in credit spread.
SRI (Socially Responsible Investing)
Investment strategy excluding companies based on ethical criteria.
Standard Deviation
A statistical measure of how dispersed returns are around the average.
Stochastic Oscillator
A momentum indicator comparing closing price to its range over a period.
Stock Split
A corporate action increasing shares outstanding while proportionally reducing the share price.
Stop Order
An order that becomes a market order once a specified trigger price is reached.
Stop-Limit Order
An order combining stop and limit features, becoming a limit order when the stop price is triggered.
Straddle
An options strategy buying both a call and put at the same strike price.
Strangle
An options strategy buying OTM calls and puts at different strike prices.
Strike Price
The predetermined price at which an option can be exercised.
Style Drift
When a fund's investments deviate from its stated investment style.
Sum-of-Parts Valuation
Valuing a company by adding up the value of its separate businesses.
Sum-of-the-Parts Valuation (SOTP)
Valuation method that values each business segment separately.
Sunk Cost Fallacy
Continuing an investment because of resources already committed rather than future prospects.
Support and Resistance
Price levels where a stock tends to stop and reverse direction.
Survivorship Bias
Overestimating returns by only including funds that survived the period.
Sustainable Growth Rate
Maximum growth rate achievable without additional external financing.
Swap Spread
The difference between swap rates and Treasury yields of same maturity.
Swing Trading
A short-term trading strategy holding positions for days to weeks.
Symmetrical Triangle
A neutral pattern with converging support and resistance lines.
Systematic Risk
Market-wide risk that cannot be diversified away, affecting all securities.
T
Tangible Assets
Physical assets with material form like property and equipment.
Tangible Book Value
Book value excluding intangible assets like goodwill.
Target-Date Fund
A fund that automatically adjusts asset allocation based on a target retirement year.
Tax-Equivalent Yield
The yield a taxable bond would need to match a tax-exempt bond's after-tax return.
Tax-Loss Harvesting
Selling losing investments to offset capital gains taxes.
Tender Offer
A public offer to buy shares directly from shareholders at a specified price.
Thematic Investing
Investment strategy focused on long-term trends or themes.
Theta (Options Greek)
Measures how much an option loses value each day due to time decay.
Three Black Crows
Three consecutive long bearish candles signaling strong selling momentum.
Three White Soldiers
Three consecutive long bullish candles signaling strong buying momentum.
Time Value (Options)
The portion of an option premium above its intrinsic value.
TIPS (Treasury Inflation-Protected Securities)
U.S. Treasury bonds whose principal adjusts with inflation.
Total Assets
Everything a company owns that has economic value.
Total Liabilities
All debts and obligations a company owes to outside parties.
Tracking Error
The standard deviation of differences between portfolio and benchmark returns.
Trade Deficit
When a country's imports exceed its exports in value.
Trading Halt
A temporary suspension of trading in a security by an exchange.
Trading Volume
The total number of shares or contracts traded during a specific period.
Trailing P/E Ratio
A valuation ratio using actual earnings from the past 12 months.
Trailing Stop
A stop order that automatically adjusts as the price moves favorably.
Treasury Bill
A short-term U.S. government security maturing in one year or less.
Treasury Bond
A long-term debt security issued by the U.S. government.
Treasury Note
A medium-term U.S. government debt security with 2-10 year maturity.
Treasury Stock
Company shares that have been repurchased and are held by the company.
Treynor Ratio
A risk-adjusted measure using beta as the risk metric.
Triple Bottom
A bullish reversal pattern with three troughs at approximately the same level.
Triple Top
A bearish reversal pattern with three peaks at approximately the same level.
TWAP (Time-Weighted Average Price)
The average price of a security over a specified time period.
U
Unemployment Rate
The percentage of the labor force that is jobless and actively seeking employment.
Unsystematic Risk
Company-specific risk that can be reduced through diversification.
Uptick Rule
A restriction allowing short sales only after a price increase.
V
Valuation Spread
The difference in valuation multiples between different groups of stocks.
Value at Risk (VaR)
The maximum expected loss over a time period at a given confidence level.
Value Factor
A factor strategy investing in stocks that appear undervalued by fundamental metrics.
Value Investing
A strategy of buying undervalued stocks trading below their intrinsic value.
Value Stocks
Shares trading at prices below their fundamental or intrinsic value.
Value Trap
A stock that appears cheap but continues to decline due to fundamental problems.
Vega (Options Greek)
Measures how much an option price changes for a 1% change in implied volatility.
Venture Capital
Financing provided to early-stage, high-potential startups.
Vertical Spread
An options spread using same expiration but different strike prices.
VIX
The CBOE Volatility Index measuring expected S&P 500 volatility over 30 days.
Volatility
A measure of how much a stock's price fluctuates over time.
Volume Profile
A chart study showing volume distribution across different price levels.
VWAP (Volume-Weighted Average Price)
The average price weighted by trading volume throughout the day.
W
Wash Sale Rule
IRS rule disallowing losses if you rebuy substantially identical securities within 30 days.
Weighted Moving Average (WMA)
A moving average where recent prices have higher linear weights.
Williams %R
A momentum indicator showing where price closed relative to the high-low range.
Window Dressing
Buying winning stocks or selling losers before period-end reports.
Working Capital
The difference between current assets and current liabilities.
Y
Yield Curve
A graph showing interest rates of bonds with equal credit quality but different maturity dates.
Yield Pickup
The additional yield gained by swapping to a higher-yielding bond.
Yield to Maturity (YTM)
The total return anticipated if a bond is held until maturity.
Z
About This Glossary
This financial glossary explains key investing and trading terms in clear, practical language.
Use it to understand reports, compare companies, and make better decisions with Qiltrack AI.