We don’t have our own Financial terms glossary. However, we know where you can find some of the world’s best Financial Terms Glossaries. Below you will find five of the largest ones.
Investopedia – Financial Terms Dictionary
Investopedia.com’s comprehensive financial terms glossary with more than 13000 finance and investment definitions.
Nasdaq – Glossary of stock market terms
Nasdaq.com’s great collection of words and definitions related to the stock market.
Consumer Financial Protection Bureau – Financial terms glossary
Consumerfinance.gov’s glossary which contains terms you will find useful when teaching youth financial literacy.
Nationwide – Common financial terms
Nationwide.com glossary with common financial and investment terms and definitions.
Bank of England – Glossary
Bank of England’s glossary with financial key terms and abbreviations.
Here are some of the most common stock trading terms:
Aggressive –A stock strategy that aims to generate high returns. This usually involves highly speculative trading resulting is significant risk of loss.
Buy and Hold – This is where an investor buys stock to hold for the long term.
Buy at open – This is when an order is placed prior to the market opening.
Capital gain – The amount of money earnt by selling a stock.
Capital loss – This is the opposite of capital gain. It is the loss that results from selling a stock or other asset.
Conservative –This is the opposite to aggressive. A conservative approach tends to aim for a lower return and takes on less risky trades like blue chip stocks.
Cover – Repurchasing a previously sold contract. This is another term for hedging.
Current Market Value – The current value of an individual security or portfolio of securities.
Day Trader – A trader who makes short term speculative trades. A day trader typically opens and closes their days on the same trading day.
Diversification – Diversification is where a trader invests in securities over a range of different markets and/or sectors. For example putting some money in oil stocks and some in bonds would be classed as diversifying. This can lower the overall risk.
Equity – Ownership interest in a corporation in the form of common stock or preferred stock. It can also be expressed as total assets minus total liabilities, referred to as “shareholder’s equity”, “net worth” or “book value”. In the context of a stock trading account, it is the value of the stocks in the account, assuming that the account is liquidated at the going price. In the context of a brokerage account, it is the net value of the account (the value of securities in the account less any margin requirements).
ETF – Stands for Exchange Traded Fund. These are funds that aim to track an underlying security. There are now ETFs that track almost every security imaginable. Popular ETFs include oil, gold and currencies. Some ETFs track the underlying instrument better than others. An ETF can be bought and sold just like a normal stock.
Fundamental Analysis – This is a common method of assessing the value of a security. With stocks the fundamentals examined often include sales, earning, growth potential, level of competition, share of the market, earnings per share, P/E ratio.
Growth Strategy – A strategy based on investing in companies which are growing faster than others in the same industry, with the goal of generating capital gains rather than dividends.
Hedge funds – A fund that is permitted to use a vast array of trading strategies that are not used in mutual funds. Some of these strategies include short selling, trading futures contracts, derivative trading, forex trading. Hedge funds usually have at least six figure minimums making them only available to wealthy individual investors and institutions.
Long-Term – This often refers to investing over a long period of time, typically over five years.
Limit Order – An order stating the highest price you are prepared to pay for a stock or other instrument. These orders are placed at a price lower than the current market price. If the lower price is reached, the order will be triggered.
Long Position – This simply means to buy.
Margin Account – A trading account where the stock broker is prepared to lend you additional funds to invest with. Interest is charged on these borrowed funds, but it does give you more buying power. This leverage can increase both returns and losses.
Open a Position – This is where a position is opened to buy or sell a security.
Overbought/Oversold Indicator – Many technical indicators such as the Relative Strength Index (RSI) show when prices are overbought and oversold. This can often be indicative or a good buy or sell opportunity.
Risk Management – A management plan set out to keep risk under control. One part of this is often the amount of your account risked on each trade.
Risk Tolerance – Refers to the amount of risk a trader is prepared to take with his/her funds.
S&P 500 – Standard and Poor’s 500. The index is made up of 500 stocks throughout many sectors. The stocks are mostly American, but there are some international stocks in there too.
Short – This is when a stock is sold without having it previously covered.
Short Selling – This is when a stock is borrowed from a broker and sold. The stock needs to later be returned to the broker. Short selling is used by trader to profit from a falling stock price. The broker will borrow the stocks from one of their customers with the promise to return them later.
Spread – This is the difference between the buy and sell price. Lower spreads mean lower costs to the trader.
Technical Analysis – This refers to using historical price action to predict where the price will head in the future. Commonly tools used in technical analysis include picking out previous highs and lows, using technical indicators, pivot points, trend lines and fibonacci retracement lines.
Ticker Symbol – A symbol for a stock that it can be identified with. Every stock has a symbol, up to 5 letters long. For example microsoft has the symbol MSFT.
Volatility – The rate price action moves up and down. It is calculated by the annualized standard deviation of the daily change in price.
Volume – The number of trades during a given time frame on an exchange or for an individual security.