Stocks & Commodities
A 10 bagger is a stock that increases in value by at least 10 times its purchase price, or by at least 900%.  The term 10 bagger was coined by legendary fund manager Peter Lynch in his best-selling ...
The 52-week high and low refers to the highest and lowest market prices of a given security over a 52-week (one year) period. If you observe the market prices for a given security during a specific ...
The ABA Bank Index is a composite market index comprised of small retail and community banks. Traded on the Nasdaq, the ABA Bank Index is made up of 440 small banking institutions nationwide. These ...
An ABC agreement is a contractual agreement between an investment house and its broker which allows the firm to purchase a seat (membership) on the New York Stock Exchange (NYSE). So called for its ...
Active management is an investment strategy that tries to create excess returns through the recognition, anticipation, and exploitation of short-term investment trends. Active management is the opp...
An affirmative obligation is a responsibility incumbent upon New York Stock Exchange (NYSE) specialists to ensure that a market for a stock still exists in the absence of sufficient supply or demand....
After hours trading is the trading that occurs on electronic market exchanges after regular stock market trading hours have ended. In the United States, pre-market trading occurs between 8:00 a.m. a...
After market trading occurs on an electronic market exchange after regular trading hours have ended. In the United States, after market trading typically occurs between 4:00 p.m. and 6:30 p.m. Easte...
After the bell is a phrase referring to the end of an exchange's daily trading session. Let's say that Company XYZ wants to announce the sudden departure of its CEO and the appointment of the CFO to...
An air pocket stock is one that experiences an abrupt and severe price decline. Named for the dropping action of an aircraft flying through a random low-pressure air pocket, an air pocket stock expe...
All or nothing (AON), also known as an "all or none" order, is a condition used on a buy or sell order which instructs a broker to execute the order in its entirety or to do nothing. For example, i...
An alternative order is a group of limit orders linked together within a brokerage account. If one order is executed, all other linked orders are automatically canceled. Sometimes called an "either-...
An American Depositary Receipt (ADR) is a certificate that represents shares of a foreign stock owned and issued by a U.S. bank. The foreign shares are usually held in custody overseas, but the certi...
The American Stock Exchange (AMEX), sometimes referred to as the "Little Board," is a stock and options exchange in New York.  Though not as large as the New York Stock Exchange (NYSE), the AMEX i...
The AMEX Biotech Index is the benchmark index for the Biotechnology industry. This index was started on October 18, 1991 with a value of 200. The index broke below 100 several times prior to 1999 and...
An analyst expectation is typically a prediction of a company's quarterly or annual earnings per share. Securities analysts are tasked with the job of making earnings estimates for the companies th...
An any-and-all bid is an offer to acquire a company whereby the potential buyer offers to purchase any and all of the shareholders' shares at a specific price by a certain deadline. Let's assume Com...
The ask price is the lowest price a prospective seller is willing to accept in exchange for a specific security.  While the ask price is the lowest price a prospective seller is willing to accept, ...
The ask size is the number of shares that a seller is willing to sell at a given price. For instance, a seller is willing to part with 3,000 of their shares at a specific asking price.  People who o...
An auction market is a market in which buyers indicate the highest price they are willing to pay and sellers indicate the lowest price they are willing to accept. A trade occurs when the buyer and se...
Average down (or averaging down) refers to the purchase of additional units of a stock already held by an investor after the price has dropped. Averaging down results in a decrease of the average pri...
A back door listing occurs when a private company acquires a publicly traded company and thus “goes public” without an initial public offering. For example, let’s assume that Company XYZ is a ...
A back-stop purchaser buys leftover shares from the underwriter of an equity or rights offering. Company XYZ is going public. It plans to issue 10 million shares in an initial public offering. It...
Backing away occurs when a market maker does not honor a quoted bid or ask price for a minimum quantity of a particular security.   John Doe wants to buy 1,000 shares of Company XYZ. The market mak...
A backspread is a trading strategy whereby the investor buys a set of options with one strike price and sells a similar set of options with a lower strike price. For example, John Doe wants to adopt...
Backtesting is the process of applying a trading strategy or analytical method to historical data to see how accurately the strategy or method would have predicted actual results. For example, let's...
"Bagging the street" refers to the strategy of profiting from price changes created by block trades. For example, let's assume that Pension Fund ABC wants to buy 100,000 shares of Company XYZ. It pl...
The bandwagon effect is when people go along with what everyone else is doing. Let's say Fruit Computers launches a cellphone that is popular with hipsters. It even talks. Because the product is so ...
A bear has a negative outlook on the market (belief that the value of an asset or market will decrease). Investors generally fall into two mindsets: those with an optimistic outlook who foresee pros...
A bear market is a period of several months or years during which securities prices consistently fall. The term is typically used in reference to the stock market, but it can also describe specific s...
Behavioral finance combines social and psychological theory with financial theory as a means of understanding how price movements in the securities markets occur independent of any corporate actions....
A bellwether is a security or indicator that signals the market's direction. Let's assume Company XYZ is an auto manufacturer. If Company XYZ's stock typically falls before the rest of the automotiv...
The beneficial owner is the individual or entity that enjoys the benefits of owning an asset, regardless of whose name the title of the property or security is in. Beneficial ownership commonly ref...
The best ask is the lowest price offered by a stock's market makers. For stocks, the best ask is quoted in dollars. For bonds, the best ask is quoted as a percentage of face value or (for Treasuries ...
Best execution refers to the imperative that a broker, market maker, or other agent acting on behalf of an investor is obligated to execute the investor's order in a way that is most advantageous to ...
The best-price rule refers to Securities and Exchange Commission (SEC) Rule 14d-10. This rule requires an entity making a tender offer for a certain class of shares to make the same offer to all the...
The bid price is the highest price that a prospective buyer is willing to pay for a specific security. The "ask price," is the lowest price acceptable to a prospective seller of the same security. Th...
Bid size is the number of shares a buyer is willing to purchase at a given price. For bond trading, bid size is measured in dollars. Let's assume you place an order to purchase 100 shares of Company...
The bid-ask spread (also known simply as "the spread") is the difference between a security's bid price and its ask price. Let's assume you are watching Company XYZ's stock. If the bid price is $50 ...
In the investing world, Black Friday refers to the gold crisis of September 24, 1869. It sometimes also refers to the New York Stock Exchange crash of September 19, 1873.   In the retail world, Blac...
Black Monday, also called "The Crash of 1987," refers to the 509-point fall in the Dow Jones Industrial Average on October 19, 1987. It also refers to October 28, 1929, when the DJIA fell 12.8%. Bla...
Black Thursday refers to October 24, 1929, when panicked sellers traded nearly 13 million shares on the New York Stock Exchange (more than three times the normal volume at the time), and investors su...
Black Tuesday, also known as the Wall Street Crash of 1929, was the worst stock market crash in US history. Black Tuesday was an abrupt end to the rapid economic expansion of the roaring 20’s, and ...
Blank check preferred stock refers to the issuance of a class of preferred shares where the board of directors has authority determining voting rights, dividends, and conversion without separate shar...
Blue sheets are petitions for information from the Securities and Exchange Commission (SEC) to investment companies whose trading activity has resulted in significant price movements. Blue sheets ar...
A "Bo Derek" is a so-called perfect investment. The term comes from the 1979 movie "10," starring the actress Bo Derek, who depicted "the perfect woman." The term is less common now than it was in t...
A boiler room is a call center in which salespeople call potential investors in an attempt to sell risky, or even falsified, investment opportunities using aggressive and unethical tactics. The term...
A broker-dealer is an individual or company that buys and sells securities for its clients and for itself. Broker-dealers differ from plain-vanilla brokers, which can only buy and sell for their clie...
A brokerage fee compensates a broker for executing a transaction. It is usually, but not always, a percentage of the transaction value. In finance, stockbrokers most often come to mind, but real esta...
Bulge bracket is a term used to describe the investment company(ies) with the highest volume of sales of an initial public offering (IPO) When a company issues new securities in the market, groups o...
A bull has a positive outlook on an asset class or an entire market. In investing terminology, bull is the opposite of bear. Investors have perceptions and expectations about the securities markets ...
A bull market is a period of several months or years during which asset prices consistently rise. The term is usually used in reference to the stock market, but it can describe specific sectors such...
The bull/bear ratio indicates overall investor sentiment in the market by comparing the number of bullish and bearish investors. This market indicator is calculated and published weekly by the Invest...
Burn rate is the amount of time it will take a company to exhaust its capital cushion.  Burn rate is usually expressed in terms of cash burned per month, but can be expressed according to any time ...
Buy and hold is an investment strategy whereby an investor holds securities for the long-term, regardless of short-term market fluctuations. Let's assume you have $100,000 to invest. Based on your c...
Buying on margin refers to borrowing from a brokerage firm (through a margin account) to make an investment. You want to buy 1,000 shares of Company XYZ for $5 per share but don't have the necessary...
A cage is a department in a brokerage firm. The cage is a physical location in which people at a brokerage firm handle physical securities and certificates. The location is called a cage because it ...
A calendar effect is a theory that stock prices will perform differently at different times of the year. There are many different calendar effects, including the Monday effect, "Sell in May and Go A...
In a call market, buy and sell orders are grouped together and then executed at specific times, rather than executed one by one continuously. Let's assume that the following buy orders for Company X...
Cancel former order is a specific type of trade order a client places with a broker in order to cancel an unfilled buy or sell order. For example, if a client has an outstanding order to buy 100 sha...
In the finance world, a canceled order is an order that is deleted before it is executed. Let's say Jane Smith calls her broker, John Doe, and tells him to buy 1,000 shares of Company XYZ. John puts...
In the finance world, a cancellation is a notice informing a broker that a trade was made incorrectly. In the insurance world, a cancellation occurs when a policyholder stops paying the premium on an...
Capitulation occurs when investors attempt to exit an investment or market so quickly that they are willing to surrender any and all gains to do so. Panicked behavior often causes a capitulation, and...
A cash cow is a business unit, product line, or investment that has a return on assets (ROA) greater than the market growth rate. The idiom refers to the idea that it produces "milk" (profit) long af...
Class A shares are either 1) common stocks or 2) preferred stocks that offer enhanced benefits, such as greater voting rights and a higher dividend priority.  For example, let’s say Joe purchases...
Class B shares are either 1) common stocks or 2) preferred stocks that generally give fewer benefits to shareholders than class A shares. For example, Joe purchases stock in company XYZ.  If Joe bu...
The closing bell is a term used to describe the time that an exchange's daily trading session ends. Each trading day, the New York Stock Exchange (NYSE) rings its bell at 4 p.m. Eastern, signifying ...
A closing price is the trading price of a security at the end of the trading day. In real estate, it is the price at which a piece of property sells. The New York Stock Exchange has the most famous ...
A closing quote is the trading price of a security at the end of the trading day. The New York Stock Exchange has the most famous closing bell (so famous that the term has a service mark). At 4 p.m....
The CNN effect refers to a major negative impact on consumer spending as a result of breaking news. CNN (which was later joined by MSNBC, BBC World News and Fox News) offers minute-by-minute updates...
Common stock represents ownership interests in corporations. The most prominent characteristics of common stock are that they entitle the shareholder to vote on corporate matters (typically, the sha...
A composite is a grouping of securities, indexes or other items. One of the most well-known composites in the finance world is the Dow Jones Composite Average, which is  a price-weighted average of...
A composite average is an average of the components of other averages. For example, the Dow Jones Composite Average is a price-weighted index of the companies that compose the Dow Jones Industrial A...
Also called the Zaraba method, the continuous auction method is a method of trading securities.   In the continuous auction method, which many Japanese exchanges use, the exchange fills orders by m...
"Cornering the market" refers to the process of acquiring enough shares of a certain security or asset with the intention of illegally manipulating its price. Let's assume you want to profit from co...
A correction refers to a price decline of at least 10% of any security or market index after a temporary increase in market prices. The stock market's value is always rising and falling. Sometimes, ...
A countercyclical stock is a stock whose price tends to move in opposition to the overall business cycle. When the market rises, the stock price falls, and when the market falls, the stock price move...
Cross-listing (also known as interlisting or dual listing) is the listing of any security on two or more different exchanges. Let's assume Company XYZ is a Canadian public company that lists its sh...
Cyclical stocks are those that tend to move strongly higher and lower along with the overall business cycle. These stocks represent ownership in companies that are very sensitive to economic fluctuat...
A daily trading limit is the maximum gain or loss allowed on a derivative or currency in one trading day. For example, let's say that a forward contract on Company XYZ stock has a trading limit of X...
Dalal Street is slang for the Bombay Stock Exchange. India's Bombay Stock Exchange is located on Dalal Street, as are many financial institutions. Similar to the term "Wall Street," "Dalal Street" r...
Dark pool liquidity refers to the amount of trading activity that occurs directly between parties without the use of an exchange, thereby keeping the transaction private. Dark pool liquidity usually...
A dash to trash occurs when investors bid up the price of a security to a point well above the security's reasonable value. For example, let's assume that Company XYZ is a restaurant company that ha...
In the finance world, a dawn raid is the purchase of a large number of shares or securities as soon as the market opens, usually in a takeover effort. Let's say that Company XYZ owns 40% of Company ...
A day order is an order to buy or sell a security by the end of the day. Let's assume that John Doe wants to buy Company XYZ shares, but he's going to Bermuda for two weeks tomorrow and doesn't want...
Day trader is a term applied to a very active securities trader who holds securities for a short period of time. Day traders will often open and close a position within the same day. While many day ...
A day-around order is an order that replaces an order from another day. It is most common in the equities markets. A day order is an order to buy or sell a security by the end of the day. For examp...
A dead cat bounce refers to a temporary recovery in a stock price or a temporary market rally after a significant downward trend. For example, let's assume the market has been falling over the last ...
A Death Star IPO is a wildly successful IPO. The term is a reference to the Star Wars movies, in which Darth Vader's Death Star battle station could pulverize other planets with a single laser beam. ...
A defensive stock is a stock that is either stable or a market outperformer during an economic contraction. Defensive stocks are usually found in industries that produce necessary and often relative...
Delisting refers to the removal of a security from active trading. It generally occurs when a company goes private, is bought out, declares bankruptcy or fails to meet listing requirements. Voluntar...
The Depository Trust & Clearing Corporation (DTCC) is a subsidiary of the National Securities Clearing Corporation (NSCC). The DTCC, established in 1973, settles transactions between buyers and s...
Direct access trading (DAT) refers to any computerized trading system which connects traders to markets, thereby eliminating the need for a broker. Direct access trading (DAT) encompasses a variety ...
"Dogs of the Dow" is a stock-picking strategy whereby an investor buys equal amounts of the 10 highest-yielding stocks within the Dow Jones Industrial Average at the beginning of each year. After eve...
The Dow 30 is slang for the Dow Jones Industrial Average. The Dow 30 is probably the best-known and most widely followed index in the world. When the media reports on "how the market fared" on any g...
The Dow Jones Industrial Average (DJIA), sometimes referred to as simply the Dow, is one of several well-known stock market indices. The DJIA was created by Charles Dow, founder of the Wall Street J...
A company has dual-class stock if it has more than one type of stock and the different classes have varying voting rights, dividend payments, or other characteristics. Companies can have several cla...
A Dutch auction is a method for pricing shares (often in an initial public offering) whereby the price of the shares offered is lowered until there are enough bids to sell all shares. All the shares ...
An earnings call is a public announcement, usually via conference call, of a company's profits, usually on a quarterly basis. Company XYZ is a public company. As such, it must file a 10Q every quart...
Earnings season refers to the four times per year when most public companies announce their quarterly and/or annual earnings. Although there are no official dates, earnings seasons usually last abou...
An earnings surprise in an unexpected difference between a company's actual earnings per share and analysts' expected earnings per share. Let's assume that analysts expect Company XYZ to report $0...
An easy-to-borrow list is a brokerage firm's list of securities that are available for shorting.   Short selling involves a three-step trading strategy that seeks to capitalize on an anticipated d...
Eating stock occurs when a broker/dealer or market maker has to purchase stock because there are not enough buyers. Let's say Company XYZ is an investment bank that is underwriting the initial publi...
To get eighthed is to be outbid or undercut by one-eighth of a dollar (12.5 cents). Let's say Company XYZ is a big pension fund that wants to buy 500,000 shares of ABC Company from the DEF pension f...
An either-or order is a group of limit orders linked together within a brokerage account. If one order is executed, all other linked orders are automatically canceled. Sometimes called a "one-cancel...
Commonly known as an ECN, an electronic communication network is a system for trading financial instruments that takes place outside of the markets and is sanctioned by the Securities and Exchange Co...
Put simply, equity is ownership of an asset of value. Ownership is created when the owner contributes to the financing of the asset purchase. Another way to finance the asset purchase is with debt. T...
Equity financing is the method of raising capital by selling company stock to investors. In return for the investment, the shareholders receive ownership interests in the company. In order to grow, ...
Extended trading is the pre-market or after-market trading that occurs on electronic market exchanges either before or after regular stock market trading hours. In the United States, extended tradin...
FAAMG is an acronym that describes five of the most popular tech stocks whose parent companies have come to influence so many of our purchases and a large part of the market: Facebook, Apple, Amazon,...
FAANG is an acronym that describes five of the most popular tech stocks whose parent companies have come to influence so many of our purchases and a large part of the market: Facebook, Apple, Amazon,...
FANG is an acronym that describes the four most popular tech stocks whose parent companies have come to dominate our lives and the market: Facebook, Amazon, Netflix, and Google (now called Alphabet)....
Fill or kill (FOK) is a client's instruction to his or her broker to either fill the entire order immediately or to cancel the order. Let's assume you want to purchase 1 million shares of Company XY...
A financial market is a location where buyers and sellers meet to exchange goods and services at prices determined by the forces of supply and demand. A financial market may be a physical location o...
A company's float is an estimate of the number of outstanding shares available for the public to trade. Float, sometimes referred to as free float or "public" float, does not include restricted shar...
A floor broker, also known as a pit broker, is a brokerage firm employee who executes orders on the floor of a stock or commodity exchange on behalf of clients. A floor broker receives an order from...
Forever stock is a term used to describe a stock that you can buy and hold for the rest of your life.  Forever Stocks are high-quality securities that you can count on for strong, steady returns -...
A foul weather fund is a mutual fund that outperforms the market during poor market conditions. The goal of the fund is to minimize or benefit from the effects of a downward move in the market. Capa...
Free cash flow per share is a measure of how much cash per share a business generates after accounting for capital expenditures like equipment or buildings. Free cash flow is available to be used for...
A company's free float refers to the number of outstanding shares that are available to the public for trade. Free float is sometimes referred to as float or public float. The equation for free floa...
A futures commission merchant (FCM) is a company or individual certified to negotiate the sale and purchase of futures contracts, as well as oversee the delivery of underlying commodities to investor...
Going public refers to a company's first issuance of stock on the open market. In most cases, the offering, called an initial public offering (IPO), makes the company's stock accessible to a large gr...
Goldbrick shares are shares of stock that appear valuable but are actually worthless or worth very little. For example, let's assume that Company XYZ is a tech company with growing revenues but grow...
In the trading world, a golden cross occurs when a stock's short-term moving average rises above its long-term moving average. For example, let's assume that Company XYZ’s 15-day moving average h...
Good this month refers to a type of trading order is automatically canceled if it is not filled by the end of the month in which the client makes the order. For example, let's assume an investor wan...
Good this week is a type of trade order that is automatically canceled if it is not filled by the end of the week in which the client makes the order. For example, let's assume an investor wants to ...
A good through order is a trade order with a deadline. Usually, it is a stop loss or limit order.  Let's assume you want to buy 100 shares of Company XYZ, but you don't want to pay more than $5 pe...
Good til Cancelled, or GTC, is used to refer to an order to buy or sell a stock at a set price that remains in effect until the investor cancels the order or the trade is completed. When an investor...
In the investing world, a gray market exists when people begin trading shares that have not been issued yet. In the business world, a gray market is the novel but not always illegal process of obtain...
A green shoe option is a clause contained in the underwriting agreement of an initial public offering (IPO). Also known as an over-allotment provision, it allows the underwriting syndicate to buy up ...
Growth at a reasonable price (GARP) is an investment strategy that combines tenets of both growth and value investing by finding companies that show consistent earnings growth but don't sell at overl...
A growth company is characterized by a rate of growth higher than that of the overall economy. Growth companies generate consistently high levels of earnings, and place greater weight on reinvesting...
H-shares are shares of Chinese companies that are listed on the Hong Kong Stock Exchange. Hong Kong is a "special administrative region" of China. It was a British colony from the 1830s to 1997. Des...
A half stock has a par value that is 50% of what is considered normal. Let's assume the par value of a share of preferred stock is usually $100. Company XYZ issues preferred stock with a par value o...
Hard-coded stock has a unique identifier (a "ticker symbol") assigned to it by a registered exchange. Stocks traded on a registered exchange (for example, the New York Stock Exchange) are represente...
The healthcare sector is the sector of the economy made up of companies that specialize in products and services related to health and medical care. The healthcare sector includes publicly-traded co...
In the investing world, heavy refers to a security whose price can't seem to rise. Let's say Company XYZ has been trading between $12 and $15 a share for the last six months despite two quarters of ...
There are a lot of reasons a security might be held at the opening: acquisition announcements, order problems or listing violations. Stock exchanges can stop trading at any time, but when they stop ...
A high flier is stock that has risen very quickly. Let's say Company XYZ rises 45% in five days -- well ahead of the market's rise of 10% over that time. The stock volume is exceptionally high -- ma...
High frequency trading (HFT) is a computerized trading strategy used to exploit fleeting market inefficiencies. These ultra-short-term positions can be in a wide range of assets: stocks, options, fut...
A hybrid security is a security that has characteristics of one or more asset classes. For example, a convertible bond is a hybrid security because it is a bond that allows the holder to exchange th...
An Icahn Lift is a rise in stock price associated with an investment by famed activist shareholder Carl Icahn. Carl Icahn was a corporate "raider" in the 1980s and made millions buying and selling c...
An iceberg order is a large order that has been split into several smaller orders to conceal the "real" size of the order. Let's assume Company XYZ is a $50 billion pension fund. It often buys and s...
An impact day is the day on which a company's secondary offering begins trading. Let's say Company XYZ is a public company and would like to sell additional shares in order to raise money to build a...
An index is a statistical aggregate that measures change. In finance, they usually refer to measures of stock market performance or economic performance. Let's say we want to measure the stock price...
An initial margin, or initial margin requirement, is the amount an investor must pay in cash for securities before the broker will lend money to that investor to buy more securities. This borrowing ...
An initial public offering (IPO) refers to the first time a company publicly sells shares of its stock on the open market. It is also known as "going public." The proceeds from the sale of stock sh...
Insider information refers to confidential information about a company that has not been publicly disclosed. Given their position, managers and executives within a company are privy to information a...
Insider trading refers to the trading of securities by corporate insiders such as managers or executives. Insider trading can be legal or illegal depending on if the information used to base the tra...
IPO Lockup refers to the period of time after a company initially goes public during which company insiders are not allowed to sell company shares. In an initial public offering (IPO) often receive ...
Issued shares include all shares that are currently owned by stockholders, company officials, and investors in the public domain. Issued shares do not include shares repurchased by a company. Issued...
The January barometer posits that gains in the S&P 500 index for the month of January predict market gains for the entire year. The January barometer is based on the view held by many in the sto...
The January Effect refers to a pattern exhibited by stocks -- particularly small-cap stocks -- in which they've shown a tendency to rise during the last several trading days in December and then cont...
Jobber is a slang term for an agent in business, particularly trading. In the broadest sense of the word, a jobber is an individual who makes a living from commissions he/she earns as an agent for t...
In the trading world, kill refers to half of a fill or kill (FOK) order, which is a client's instruction to his or her broker to either fill an order immediately and completely or cancel the entire o...
Laggard describes a stock that fails to perform as well as the overall market or a group of peers. In a broad sense, the term laggard connotes resistance to progress and a persistent pattern of fall...
A large-value stock is a stock whose intrinsic value is greater than its market value. Let's say John Doe is analyzing Company XYZ. He uses a discounted cash flow model to determine that the intrins...
Last-sale reporting refers to the submission of trade details in the Nasdaq market. When a broker executes an order for a stock traded on the Nasdaq exchange, he or she must report it to Nasdaq no m...
In the securities industry a lead underwriter is a company, usually an investment bank, that helps companies introduce their new securities into the market by leading a syndicate of investment banks ...
The left-hand side of a stock quote is the bid. A bid-ask is a quote that reflects the security’s bid price and its ask price. If, for example, the bid-ask for Company XYZ stock is $50 - $50.25, t...
A level I quote is the current best bid and offer for a security that trades on the Nasdaq or over-the-counter markets. Level I quotes do not disclose which market makers are bidding for or offering...
A level II quote is a set of real-time trading information, including the best bid/ask prices from market makers, for a security that trades on the Nasdaq or over the counter (OTC) markets. A level ...
A level III quote is pricing information made available to registered Nasdaq market makers. A level III quote for Company XYZ stock would include the real-time bid price, ask price, quote size, pric...
Limit orders allow you to set a price at which you want to buy or sell a stock. Unlike market orders, your purchase or sale will go though only when the price reaches the level that you specify. F...
A listed security is a stock, bond, derivative, ETF, mutual fund, or other security that trades on a national exchange such as the New York Stock exchange or the Nasdaq. The Nasdaq, which stands for...
A locked market, also called a daily trading limit, is the maximum gain or loss allowed on a derivative or currency in one trading day. Let's say a forward contract on Company XYZ stock has a tradin...
Losing your shirt refers to an investment move resulting in a total loss of all financial assets. Meant to imply a degree of loss serious enough to warrant selling the shirt off your back, "losing y...
A lot is a securities trade for a “standard” number of trading units. In stock trading, a lot is 100 shares (also called a "round lot"). However, inactive stocks generally trade in 10-share lots....
Main Street refers collectively to members of the general population who invest in the capital markets. Individuals and businesses that do not work for financial and investment companies are conside...
A maintenance margin is a limit after which a brokerage firm can make a margin call. A margin account is a loan from a brokerage firm. The loan proceeds are used to make an investment. Let's assume ...
A majority shareholder refers to a shareholder who owns over 50% of stock in a company. A single shareholder who maintains ownership of more than 50% of a company's outstanding stock qualifies as a ...
Making a market is a process whereby a person or brokerage house that is always prepared to buy and sell securities in order to provide liquidity to the markets. In order to make a market, a brokera...
A management buyout (MBO) occurs when the current management of a company acquires a controlling interest or the entire interest in a company from existing shareholders. For example, Company XYZ is ...
A market average is the general level of prices in a stock market as expressed by a basket of frequently traded stocks. A market average, best exemplified by the Dow Jones Industrial Average (DJIA) ...
Market breadth is a ratio that compares the total number of rising stocks to the total number of falling stocks. Market breadth, or stock-market breadth, is used in technical analysis to gauge the ...
Market capitalization refers to the value of a company's outstanding shares.  The formula for market capitalization is: Market Capitalization = Current Stock Price x Shares Outstanding It is impo...
A market correction refers to a price decline of at least 10% of any security or market index following a temporary upswing in market prices. The stock market's value is always rising and falling. S...
Market depth refers to a security's ability to tolerate the execution of large market orders without having a large effect on the security's price. Also called depth of market, market depth measures...
The strong form of market efficiency essentially proclaims that it is impossible to consistently outperform the market, particularly in the short term, because it is impossible to predict stock price...
A market identifier code (MIC) is a four-letter or digit abbreviation that represents a specific stock market. MICs always begins with the letter "X," followed by a combination of three additional l...
Market if touched (MIT) is an order that will be executed only if a security reaches (touches) a specific price. Investors place an MIT order with a broker if they wish to delay buying or selling a ...
A market maker is a person or brokerage house that is always prepared to buy and sell securities in order to provide liquidity to the markets. By holding a disproportionately large number of a given...
A market maker spread is the difference between the bid and ask prices offered by a market maker. The market maker spread is calculated by subtracting a market maker's ask price (price at which he/s...
Market momentum is the perceived strength of a positive or negative change in market prices. Market momentum is the ability of a market to sustain an increase or decrease in prices. Market momentum ...
Market on close (MOC) is a market order that is executed at the latest possible time during a trading session. When a trader receives an MOC from a client, that trader may enter the order as late as...
Market overhang refers to a decline in a stock's price driven by expectations that the price will experience further declines. Market overhang is a phenomenon whereby investors put off buying shares...
A market proxy is a variable that theoretically simulates the behavior of the overall market. Analysts and investors use market proxies as part of statistical analyses and portfolio modeling. Analys...
Market psychology refers to the manner in which the market reflects its participants' collective emotional state. Peoples' perceptions of the market directly impact price movements and trends. Marke...
Market sentiment is the general feeling about the climate of the market as expressed by the direction of market prices. Market sentiment, as the name suggests, describes the outlook of investors in ...
A market swoon is an abrupt fall in the value of a market index. Derived from a term meaning "to faint" or "pass out," market swoon is a vernacular expression that describes a sudden and widespread ...
Market versus quote (MVQ) refers to the most recent market price at which a security was either bought or sold with regard to the latest bid and ask prices. MVQ is the difference between the last ma...
Mega cap is a designation for any company with a market capitalization in excess of $200 billion. The largest companies in the world are referred to as mega caps because of their relative market siz...
Generally speaking, a micro cap is a company worth between $50 million and $300 million. A company's market capitalization is the market value of all the company's stock.  It is calculated accordin...
A mid cap is generally described as a company with a market capitalization between $2 billion and $10 billion. Market capitalization is a measure of the market value of a company. If the market val...
"Mine" and "yours" are colloquial references to buy and sell transactions. Buy and sell trades are a cornerstone of the capital market. Traders use the terms "mine" and "yours" to indicate a desire ...
Also known as a downtick, a minus tick occurs when a security sells at a price less than the preceding sale. A minus tick is the opposite of an uptick. For example, if there is a trade for XYZ Compa...
The Monday effect predicts that performance in equity markets will reflect the trends that were influencing the market toward the end of trading the previous Friday. The reasons for the Monday effec...
Naked shorting refers to the practice of shorting units of a given security in advance of ensuring whether or not they can be borrowed. Traders and investors engage in short selling in order to mak...
A nano cap is a company with the smallest market capitalizations in the market place, typically below $50 million. Market capitalization is a measure of the market value of the outstanding stock of ...
Nasdaq, which stands for the National Association of Securities Dealers Automated Quotation system, is a computerized system for stock trading. The Nasdaq does not have a physical trading floor; it ...
The Nasdaq 100 index is one of the most frequently cited "technology" indexes. The Nasdaq 100 Index is composed of the 100 largest stocks (based on market capitalization) traded on the Nasdaq. This ...
The Nasdaq Composite is a broad market index that encompasses about 4,000 issues traded on the NASDAQ National Market. The index first started in February of 1971 with a base value of 100. The Nasda...
The National Best Bid and Offer (NBBO) is the highest bid and lowest offer price quoted on Nasdaq. For example, let's say the following people have buy orders (bids) for Company XYZ (these are the p...
The national market system (NMS) is a system that regulates the disclosure and execution of trades across all exchanges.   Congress established the National Market System in 1975. The NASD and Nas...
In the trading world, negative obligation refers to a stock specialist's responsibility to avoid buying or selling shares for their own accounts in order to match orders. The New York Stock Exchange ...
Net liquid assets are cash and securities that can be converted to cash quickly, minus current liabilities. The formula for net liquid assets is: Net Liquid Assets = Cash + Marketable Securities - C...
The net realizable value (NRV) of an asset is the money a seller expects to receive for the sale of an asset after deducting the costs of selling or disposing of the asset. Let's assume Company XYZ ...
In finance, net short refers to holding more short positions than long positions in a given security, sector or portfolio. Net short is the opposite of net long. For example, let's assume an investo...
Net unrealized appreciation (NUA) refers to the difference between the cost of a security or investment and the current market value of that security or investment. Let's assume Jane purchased 100 s...
In trading, net volume refers to the difference between a security's uptick volume and its downtick volume. Let's assume that investors bought 4,000,000 shares of Company XYZ today (the uptick volum...
A new issue is a never-before-offered security. Let's assume that Company ABC makes a public offering of shares in order to finance its business expansion. Company ABC, the issuer of the stock, must...
The New York Stock Exchange (NYSE) is the oldest stock exchange in the United States, and it's located on Wall Street in lower Manhattan. It is the world's largest stock exchange by market capitaliza...
The New York Stock Exchange (NYSE) is open Monday through Friday from 9:30 a.m. to 4:00 p.m. Eastern Time. However, the NYSE does observe certain holidays. The dates listed for holidays reflect the ...
The October Effect is the theory that stock prices will fall in the month of October. In general, investors create a self-fulfilling prophecy regarding the October Effect. The crashes of 1929 and 19...
An odd lot is an order for anything less than 100 shares. This is the opposite of a "round lot," which are orders in multiples of 100 shares. Investors, particularly individuals, are frequently unab...
The odd-lot theory states that an increase in odd lot activity is a buy signal in a market. An odd lot is a group of shares that is not a multiple of 100 (100 shares is called a round lot). Typicall...
The New York Stock Exchange is commonly referred to as the Big Board. Accordingly, "off board" refers to trades of stocks that occur outside major exchanges. Off-board trades usually occur between t...
An off-floor order is an investor's request to a broker to buy or sell securities. An off-floor order is what many consider a typical order transaction. For example, let's say John wants to sell 100...
A One-Cancels-All (OCA) order is a group of limit orders linked together within a brokerage account. If one order is executed, all other linked orders are automatically canceled. Sometimes ca...
In trading, a one-cancels-the-other order is an instruction given when placing two orders simultaneously. If one part of an order on a security is executed, then the other part is canceled. Such an o...
One-sided markets can be volatile and very stressful for market makers. Market makers are obligated to facilitate trading in particular stocks even if doing so is inconvenient or less profitable. In ...
In the stock markets, open refers to the beginning of the trading day or the price of a security at the beginning of the trading day. The New York Stock Exchange has the most famous opening bell. At...
An open order is an instruction to buy or sell securities that has not been executed or cancelled.  Another term used is "backlog order." An order may remain open when an investor places conditions...
Opening bell refers to the beginning of the trading day on an exchange. However, in the United States, only the New York Stock Exchange (NYSE) rings an actual bell every day. At 9:30 A.M. on every t...
The open is the start of a new day, though it is important to note that that doesn't necessarily mean trading hasn't been going on right before the open. After-hours markets remain open as do other e...
Opportunity cost is the return on an investment/opportunity you missed out on, compared to the return on the investment that you chose. To determine what was lost (or gained), opportunity cost may be...
Original cost is the total cost attributed to purchasing an asset. For accounting purposes, it is important to identify the original cost of an asset.  The original cost includes all costs associat...
Outstanding shares are common stock authorized by the company, issued, purchased and held by investors. Outstanding shares may also be referred to as shares outstanding, or issued shares. Outstandin...
An over the counter security is traded through a dealer network rather than through a centralized, formal exchange (such as the NYSE, Nasdaq, or London Stock Exchange). Assets traded OTC are usually ...
The over-the-counter (OTC) market, also known as the over-the-counter bulletin board (OTCBB), is a quotation service offered by the National Association of Securities Dealers (NASD) that provides quo...
Overweight refers to a given security which has been disproportionately allocated in an investment portfolio relative to a benchmark. It is the opposite of underweight. Investment portfolios are com...
The Pacific Exchange (PCX) was a stock exchange based in San Francisco and Los Angeles. Founded in 1882, the PCX used to be a trading floor in San Francisco. In 1957, it merged with the Los Angeles ...
In the finance world, painting the tape means to trade securities in a manipulative way in order to influence the reported trading data for those securities. Let's say traders A and B want more peop...
A pairoff, also known as "pairing off," occurs when a brokerage firm buys and sells short and long positions that offset one another and then settles those trades in cash. Let's say Brokerage XYZ a...
Panic buying refers to the purchase of a stock immediately after a sudden, substantial price increase. Investors watching the market may jump to buy a stock immediately after a major move in the sto...
Panic selling is the sudden and widespread selling of a security. Panic selling may occur after a sudden, sharp decline in the price of a security.  Panic selling does not involve an evaluation of ...
Paper trading is simulating market trading (buying and selling).  Investors can practice trading by simulating securities purchases and sales without actually executing transactions with money.   ...
Participating preferred stock gives stock holders priority over common stock holders for payment of dividends and proceeds from liquidation of a company. The capital stock structure of a company is ...
Penny stocks are small-cap equity shares that trade in the over-the-counter market for prices between several cents and ten dollars. Penny stocks are usually issued by small or micro-cap companies t...
The Philadelphia Gold and Silver Index (Nasdaq: XAU) is traded on the Philadelphia Stock Exchange and is made up of 16 precious metal mining companies. The Philadelphia Gold and Silver Index is made...
The Philadelphia Semiconductor Index, or SOX, is an index created by and traded on the Philadelphia Stock Exchange. It was introduced on December 1, 1993 with a split-adjusted value of 100. The SOX ...
Pink Sheets is a publication compiled daily by the National Quotation Bureau that shows over-the-counter (OTC) stocks' bid and ask prices and the dealers that exchange them.  The companies listed o...
Political risk is the risk of financial, market or personnel losses because of political decisions or disruptions. Also known as "geopolitical risk." There are many environmental factors facing busi...
A Ponzi scheme is an investment scam that pays existing investors out of money invested by new investors, giving the appearance of earnings and profits where there are none. Ponzi schemes are also kn...
Portfolio management refers to the professional management of securities and other assets. Also referred to as "asset management" and "wealth management." Portfolio management includes a range of pr...
Position limit refers to the ceiling placed on the number of contracts on a single security which may be held by an individual or cooperative group. Determined by the Commodity Futures Trading Commi...
Pre-market trading is the trading that occurs on electronic market exchanges before regular stock market trading hours begin. In the U.S., pre-market trading occurs between 8:00 a.m. and 9:30 a.m. E...
Preferred shares represent an ownership stake in a company -- in other words, a claim on its assets and earnings. However, as the term suggests, "preferred" shares carry certain advantages. While pre...
Like shares of common stock, shares of preferred stock represent an ownership stake in a company -- in other words, a claim on its assets and earnings. However, as the term suggests, "preferred" stoc...
Preservation of capital is an investment strategy that focuses on preventing any losses of an investment's face value. A preservation of capital is a conservative investment philosophy that invests ...
Previous close shows what the price of a stock or market index was when the market closed on the previous trading day. Over the course of a day as securities are traded, a stock's price will rise an...
A price band is a price floor and a cap between which a seller will let buyers place bids on a security, usually during an initial public offering (IPO) For example, let's say Company XYZ is going t...
In the stock market, a price change is the difference in trading prices from one period to the next or the difference between the daily opening and closing prices of a share of stock. For example, l...
Price continuity occurs when the number of transactions (volume) does not in and of itself affect a security's price. In trading, buyers offer bid prices and sellers offer asking prices. The differe...
A price ratchet is a trigger that changes the price of a security. For example, let's assume that the United States government defaults on interest payments on its Treasury securities. Because the e...
Price risk is simply the risk that the price of a security will fall. Earnings volatility, unexpected financial performance, pricing changes, and bad management are common factors in price risk. For...
A price target is an analyst's expectation for the future price of a security.  For example, let's assume that the Jones-Smith investment bank provides research reports about Company XYZ stock. The...
Price tension refers to the presence of a large bid-ask spread. Let's assume you are watching Company XYZ stock. If the bid price is $50 and the ask price is $51.50, then the bid-ask spread (and the...
Price transparency is the ability to know all of the bid prices, ask prices, and trading quantities for a given stock, good, or service at any point in time. For example, NYSE quotes have limited pr...
A price-weighted index is an index in which the member companies are weighted in proportion to their price per share, rather than by number of shares outstanding, market capitalization or other fact...
Profit taking is the act of selling stock to take advantage of a sharp rise in the stock price. Occasionally, investors will sell off their shares in a stock after the stock rises sharply.  It may ...
Program trading refers to automated trading by investors using computer programs.  Program trading is used by institutional investors for large-volume trades through direct connections with the mar...
An investor employs a protective put strategy when he purchases a put option of a stock of which he already owns shares. A protective put is usually used by an investor who has unrealized gains on a...
A protective stop is a stop-loss order put in place to guard against losses beyond a specific threshold. Investors often have an idea of how much of their investment they're willing to lose. A prote...
A public limited company is a company which offers equity shares with limited liability to public investors on a registered exchange. More common in the U.K., public limited companies (PLC) offer sh...
A public offering is a process of issuing new securities for sale to the public.   For example, let’s say the founders of Company XYZ want to sell half of their shares. They need buyers and woul...
Public offering price (POP) refers to the price at which shares of a company are issued in an initial public offering (IPO) When a company issues stock for the first time as part of an IPO, the und...
Pump and dump refers to an investment scam wherein optimistic, but untrue, statements are publicized about a specific stock in order to artificially increase the price through higher demand. In a pu...
Pyramiding refers to purchasing additional units of a security with unrealized profits on open trades. Investors engage in pyramiding in order to increase their portfolio position using the paper pr...
The Q ratio is a measure of how overpriced or underpriced the whole stock market is. It is based on Tobin's Q, which measures a firm's assets in relation to its market value. The formula for Tobin's ...
Quadrix is a system that calculates stock values. The Quadrix system is trademarked by the Horizon Publishing Company. The system uses more than 80 variables in seven categories (momentum, quality, ...
Quadruple witching refers to the third Friday of every March, June, September and December. On these days, market index futures, market index options, stock options and stock futures expire, usually ...
A qualified special representative agreement (QSR) is a National Securities Clearing Corporation (NSCC) agreement that allows one broker-dealer to send a trade to a clearinghouse on behalf of another...
A qualified stock option is a type of company share option granted exclusively to employees.  It confers an income tax benefit when exercised. Qualified stock options are also referred to as "incent...
Quantitative trading is an investment strategy based on picking investments solely on mathematical analysis. Let's say John Doe runs the XYZ Fund. He uses the Quadrix system to screen and select sto...
Quarterly income preferred securities (QUIPS) are hybrid, preferred-stock-like securities issued by Goldman, Sachs & Co. QUIPS are shares of preferred stock issued by a special purpose foreign o...
Quotation is the long form of quote, which refers to stock quote. A stock quote is an estimate of price or a price at which one party is willing to buy or sell a certain number of shares of stock fro...
A quote is an estimate of price or a price at which one party is willing to buy or sell from the other. In the trading markets, a quote is the bid and ask price for a security.   For example, a qu...
Quote stuffing occurs when traders place a lot of buy or sell orders on a security and then cancel them immediately afterward, thereby manipulating the market price of the security. Manipulating the ...
Quoted price refers to stock, bond or other security quotes. A stock quote is an estimate of price or a price at which one party is willing to buy or sell a certain number of shares of stock from the...
A rally is a period of hours, days, weeks, months, or sometimes years during which securities prices consistently rise.   Identifying and measuring rallies is both art and science. Of course, diff...
The random walk theory states that market and securities prices are random and not influenced by past events. The idea is also referred to as the "weak form efficient-market hypothesis."   Princeton...
A real-time quote is a stock quote that feeds directly from the exchange and does not have a time delay.   A stock quote is an estimate of price or a price at which one party is willing to buy or ...
Rebalancing is the adjustment to an investment portfolio that realigns the investor's holdings with their targeted allocation of assets. Investors often use an asset allocation method in their inves...
A recession-proof investment does well or at least remains stable during economic contractions. Defensive stocks are the most famous kind of recession-proof investments, because they generally are a...
A record high is the highest price a security achieves in a given time period. Let's look at this random chart for Cisco Systems (CSCO). note the jagged line, which reflects the stock price. For thi...
A record low is the lowest price a security achieves in a given time period.   For example, let's look at this random chart for Cicso Systems (CSCO). note the jagged line, which reflects the stock...
Restricted stock is stock that the owner cannot sell immediately or under certain conditions. People usually come to own restricted stock through an IPO or a merger. For example, let's assume that C...
A retracement is a temporary reversal in the movement of a stock's price.  Let's say the stock of company XYZ increased 20% over the course of a day. Anyone who has ever looked at a trend line know...
A reverse split is a consolidation of a corporation's shares according to a predetermined ratio. Company XYZ wants to conduct a reverse stock split. It decides that each shareholder will own one sha...
A risk-free asset is an asset that provides a virtually guaranteed return.  Treasury bills are the most common example of risk-free assets. Because the U.S. government has the authority to simply p...
A road show is a presentation made about an investment opportunity usually given by a representative of a company at the offices of potential investors.  Businesses must travel and meet with potent...
A round lot is a securities trade for 100 trading units. In stock trading, a round lot is 100 shares. However, inactive stocks generally trade in 10-share lots. Round lots are the standard trading a...
The Russell 1000 Index is designed to track the performance of most major large-cap companies. Though it is not usually cited by individual investors, it is the third most widely used benchmark by mo...
The Russell 2000 index measures the performance of the 2,000 smallest companies in the Russell 3000 index. The Frank Russell Company created the index in 1984, and it was one of the first broad bench...
The S&P 500 Index is a diverse index that includes 500 American companies that represent over 70% of the total market capitalization of the U.S. stock market.  First developed in 1923, the inde...
The S&P Small-Cap 600 Index consists of 600 small-cap stocks.  A small-cap company is generally defined as a stock with a market capitalization between $300 million and $2 billion. The S&P 6...
The S&P Europe 350 index is made up of 350 individual European company stocks drawn from 17 major European markets and represents approximately 70% of the region's market capitalization. The S&a...
The S&P Frontier Broad Market Index (also known as the S&P Frontier BMI) measures the performance of markets in 34 small countries. The individual country indices that make up the S&P Fro...
The S&P Global 1200 index is comprised of seven indices with stocks from 29 representative countries. The index is used as a benchmark for global equity markets. The seven indices that make up t...
The S&P Global Broad Market Index (also known as the S&P Global BMI) is a widely encompassing, rules-based index that measures global stock market performance. The S&P Global BMI covers ...
The S&P Global Equity Index series is comprised of three indices: The S&P Frontier Broad Market Index, The S&P Global Broad Market Index and the S&P/IFCI. The S&P Global Equity I...
The S&P Mid-Cap 400 Index tracks a diverse basket of medium-sized U.S. firms. A mid-cap stock is broadly defined as a company with a market capitalization ranging from about $2 billion to $10 bil...
The S&P/IFCI Composite is a liquid and investable leading emerging market index. It is a subset of the S&P Emerging Plus Broad Market Index, with the addition of South Korea. The S&P/IFC...
Same-day substitution is the act of withdrawing money from and adding money to a margin account on the same day.   Let's assume you want to buy 500 shares of Company XYZ for $5 per share and 500 s...
Samurai Market is slang that refers to the Japanese stock market. People in the United States are the most common users of this term. Samurai market is often used in conjunction with “Yankee Marke...
A Santa Claus rally is a surge in the stock market that occurs between Christmas and New year's Day.  Over time, the stock markets have rallied between December 25th and January 1st more often than...
Saturday night specials are illegal rules that give preferential treatment to some shareholders and pressure others during tender offers. Let's assume Company XYZ wants to purchase the common shares...
A scale order is a group of limit orders that have increasing or decreasing prices. Let's say John Doe thinks the price of Company XYZ will fall during the trading day tomorrow, and not all at once....
The term scalpers refers to securities traders who manipulate the market.  Scalpers may also refer to traders who earn relatively small amounts of money from the arbitrage between bid prices and ask...
Scalping is a form of day trading that involves earning small profits on large volumes of securities. A day trader is a very active securities trader who holds securities for a very short time (gene...
A seasoned issue, also called follow-on offering or secondary offering, is a sale of stock by a company or by an existing shareholder of a company that is already publicly held. Let's say Company XY...
A seat is a license to trade on the floor of the New York Stock Exchange, either as an agent for someone else or for his or her own personal accounts (in which case, the person is called a floor trad...
A secondary offering refers to a large-scale market sale of a company's shares by a major shareholder. Also called a secondary distribution, a secondary offering is distinguished from an initial pub...
Sector rotation is a strategy based on moving investments across business sectors to take advantage of cyclical trends in the overall economy. The basic idea behind sector rotation is that the econo...
A secular market is a market that is for all intents and purposes captive to broader economic forces or traumas.   Let's say the United States experiences a massive terror attack on its own soil, ...
A sell-off is the rapid selling of a security leading to a sharp decline in its price.  When a substantial number of shareholders sell a specific stock, it is called a sell-off.  Generally speakin...
Settlement price refers to the market price of a derivatives contract at the close of a trading day. Also called the closing price, the settlement price is the price at which a derivatives contract ...
Share classes refers to the division of a company's equity into different classes, which have different rights. Companies generally set forth the distinguishing features of their share classes in th...
A share purchase right is an instrument that entitles the holder to purchase a specified number of shares at a specified price. Offered by an issuing company, a share purchase right gives current sh...
Shareholder value added (SVA) represents a company's worth to shareholders in the absence of liabilities and capital costs. Shareholder value added (SVA) is expressed as a company's capital costs fr...
Shares outstanding refers to all shares currently owned by stockholders, company officials, and investors in the public domain, but does not include shares repurchased by a company. Shares outstandi...
A shelf offering is a sale of stock by a company over time. Let's say Company XYZ is a public company and would like to sell shares in order to raise money to build a new factory. The company alread...
Short covering refers to the practice of purchasing securities to cover an open short position. To close out a position, a trader purchases the same number and type of shares that he sold short. Tra...
Short interest is the number of shares or units of a security that have been sold short and not yet covered or repurchased. It is typically expressed as a percentage of the total securities outstandi...
Small-cap stock refers to a company with a market capitalization (calculated by taking a firm's current share price and multiplying that figure by the total number of shares outstanding) near the lo...
Socially responsible investment (SRI) is an investment strategy that seeks both financial return and social good. Investment strategies are usually focused on returns on investment, seeking to maxim...
Specific risk is a discrete risk to which only a specific asset or type of asset is exposed. It is the opposite of systematic risk. Specific risk is the risk of an event occuring that would directly...
Speculation is a method of short-term investing whereby traders essentially bet on the direction an asset's price will move. Technically, anyone who buys or shorts a security with the expectation of...
A speculator is a person or an entity that trades securities essentially as bets that the price will go up or down, and as such, typically has an above-average risk tolerance. Although one can argue...
Also called the cash market or the physical market, the spot market is where assets are sold for cash and delivered immediately. Spot markets differ from futures markets in that delivery takes place...
The spot price is the current market price at which an asset is bought or sold for immediate payment and delivery.  It is differentiated from the forward price or the futures price, which are prices...
A spot secondary is a secondary stock offering that doesn't require the company to register with the Securities and Exchange Commission (SEC). A spot secondary is generally a transaction with just o...
A spot trade is an asset or commodity transacted and delivered immediately. Also called cash trades, spot trades occur in the spot market and are characterized by the immediate or near-immediate del...
A spread trade occurs when an investor simultaneously buys and sells two related securities that are bundled as a single unit. Each of the transactions is referred to as a "leg." The purpose of a sp...
Standard & Poor's (S&P) is a financial services company and a division of The McGraw-Hill Companies, Inc. S&P does business in six main areas: credit ratings, indices, equity research, ri...
A stock market index measures the change in the stock prices of the index's components. Let's say we want to measure the performance of the U.S. stock market. Assume there are currently four public ...
A stock quote is an estimate of price or a price at which one party is willing to buy or sell a certain number of shares of stock from the other. A stock quote consists of a bid price and an ask pric...
Stock Return Income Debt Securities (STRIDES) are callable debt securities linked to an underlying stock. STRIDES are similar to callable preferred shares in that they take part in the fluctuation of...
A stock split is a procedure that increases or decreases a corporation's total number of shares outstanding without altering the firm's market value or the proportionate ownership interest of existin...
A stock symbol -- also known as a ticker symbol -- is a string of letters used to identify a stock, bond, mutual fund, ETF or other security traded on an exchange. When a company goes public or iss...
A stockbroker is a person or a company that acts as an intermediary between buyers and sellers of stocks. Stockbrokers are often paid a commission, which is a percentage of the customer's purchase o...
A stop order (also called a stop-loss order or stop market order) is a trade order whereby the investor instructs the broker to automatically sell the stock if it drops to a certain price. For examp...
A stop limit order is a tool that is used to help traders limit their downside risk when buying or selling stocks. To do this, it combines two other types of orders: a stop order and a limit order. A...
A stop-loss order (also called a stop order or stop market order) is an order whereby the investor instructs the broker to automatically sell the stock if it drops to a certain price. For example, l...
Strategic asset allocation is the practice of realigning a portfolio's asset composition in order to accommodate changes in market climate. Portfolios are made up of different asset classes, with ea...
The Super Bowl Indicator, also known as the Super Bowl Effect, is a theory that stock prices will fall if the AFC team wins the Super Bowl. The Super Bowl is the final game in the National Football ...
A surrender fee is a fee paid by an annuity investor to withdraw some or all of his or her principal before the annuity's surrender period has expired. An annuity is a contract whereby an investor m...
The surrender period is the time an investor of annuity must wait until they may take a withdrawal from their annuity without paying a penalty or surrender fee. The surrender period is usually state...
Tailgating occurs when a broker buys or sells a security after doing the same for a client. Let's say John Doe is a broker for Jane Smith. Jane calls John and tells him she just saw a press release ...
The takedown is the price that an underwriter pays for a new issue. When a company decides it wants to issue stock, bonds or other publicly traded securities, it hires an underwriter to manage what ...
Taking the Street is slang for buying large amounts of stock from institutions so that those sellers have to buy more stock, which drives the price up.   Let's say John Doe has a Gordon Gekko compl...
When trading volume is so high that the ticker quotes are lagging behind to keep up with reporting the trades, we say the tape is late. Let's say that trading volume on the NYSE quintuples one day a...
Tape shredding occurs when a broker splits a large buy or sell order into a lot of smaller buy or sell orders. Let's say Company XYZ is a huge pension fund with billions of dollars under management....
In the trading world, a telephone booth refers to a phone bank on the floor of the New York Stock Exchange. When an investor wishes to buy or sell a security listed on the NYSE, she "places a trade"...
A tenbagger is a stock that increases by a factor of ten. Let's say Company XYZ is trading at $5 a share. John Doe buys 100 shares, costing $500. Six months later, the company announces it has found...
A tender offer is a proposal by an investor to all current shareholders of a publicly traded corporation to tender their shares for sale at a certain price at a certain time.  The prospective acqui...
The Big Board, a popular term for the New York Stock Exchange (NYSE), is the oldest stock exchange in the United States.  It's located on Wall Street in lower Manhattan, and is the world's largest s...
The opposite of a liquid market, a thin market is characterized by a small number of participants and high price volatility.  The small number of buyers and sellers in a thin market results in low ...
Thinly traded refers to an investor's inability to sell his or her investment at or near its value in a short amount of time. Things that are thinly traded are essentially illiquid. Illiquidity is a...
The third market is an over-the-counter (OTC) market in which brokers and large institutional investors trade exchange-listed securities between one another. The third market is an OTC venue in whic...
A tick is a minimum change in the price of a security. Also known as a downtick, a minus tick occurs when a security sells at a price less than the preceding sale. A minus tick is the opposite of an ...
Also called short sale rules, tick test rules are restrictions on when traders can short a stock. Also known as a minus tick, a downtick occurs when a security sells at a price less than the precedi...
A ticker symbol -- also known as a stock symbol -- is a string of letters used to identify a stock, bond, mutual fund, ETF or other security traded on an exchange. When a company goes public or issu...
Ticker tape was the paper strip used to transmit stock prices before the use of computers. A typical ticker tape quote has five components: the ticker symbol, shares traded, price, change direction,...
Total cost of ownership is an asset's cost to the purchaser in addition to the costs associated with using and maintaining it. Total cost of ownership (TCO) can be best exemplified by owning a home....
Toxic assets are assets that have experienced a significant drop in value and lack an active market where they can be sold. Toxic assets are also known as troubled assets. The most famous examples o...
A tracking stock is a security that is issued to track the performance of a wholly-owned subsidiary. A large, diversified company may issue a tracking stock based on one of its wholly-owned subsidia...
A trailing-stop loss order (or trailing-stop) is a special type of trade stop order that manages risk and offers profit protection. This exit strategy adjusts the stop price of a stock or stocks by a...
Treasury stock is stock repurchased by the issuer and intended for retirement or resale to the public. It represents the difference between the number of shares issued and the number of shares outsta...
On the third Friday of every March, June, September, and December, contracts for stock index futures, stock index options, and stock options all expire at the end of the day. The triple witching hour...
Troubled assets are assets that have experienced a significant drop in value and lack an active market where they can be sold. Troubled assets are also known as toxic assets.  The most famous examp...
Trust preferred shares (TruPS) are preferred shares typically issued by banks. And although they're called "preferred shares," there is a big difference between trust preferred stock and traditional ...
In the stock world, unchanged means that the closing quote at the end of a trading day for a particular stock is the same as the closing price for the stock the day before. For example, let's say th...
Underpricing occurs in the finance world when a company prices its shares too low in an initial public offering. When a company decides it wants to issue stock, bonds or other publicly traded securi...
In the securities industry, undersubscribed means that an offering does not have enough buyers. When a company decides it wants to issue stock, bonds or other publicly traded securities, it hires an...
A unitholder is an investor who owns the securities of a trust, like a real estate investment trust (REIT) or a master limited partnership (MLP). The securities issued by trusts and MLPs are called u...
An Unsponsored American Depository Receipt (ADR), though backed by the common stock of an offshore company, is not directly sanctioned by that company and renders the holder un-entitled to the shareh...
The term unsubscribed describes the portion of the shares in an IPO that are not sold prior to the IPO. Let’s assume Company XYZ is going public. It plans to issue 10 million shares in an initial ...
Upthrusts are false breakouts that can trap the unsuspecting trader. Upthrust patterns quickly reverse, with the stock or index then often testing the opposite end of the trading range. Upthrusts ar...
Uptick refers to the increase in the market price of a security over the preceding transaction. If a new trading price for a security is higher than the preceding one (even by one cent), the securit...
Known as Rule 10(a)(1) of the Securities Exchange Act of 1934, the uptick rule allows investors to short a security only at a price higher than the security's last trade. Essentially, a short seller...
Uptick volume is the number of shares of a particular stock that trades when the price is increasing. Let's assume that in the last hour, Company XYZ stock increased from $15 to $17 per share for 30...
A value stock is a security that is trading at a lower price than expected given the performance of the company and key performance indicators of the stock itself. A value stock may have a high divi...
The Volatility Index (VIX) is a contrarian sentiment indicator that helps to determine when there is too much optimism or fear in the market. When sentiment reaches one extreme or the other, the mark...
Volume represents the total number of securities traded during a certain period of time. Volume records the number of transactions taking place during a period of time. It is a direct measure of liq...
In the finance world, a wall of worry is an increasing amount of negative information about a security or about the market. For example, a wall of worry might be information that the economy's GDP i...
Wallflower is slang for a stock that analysts and investors tend to neglect. Usually used to describe individuals who are relegated to the sidelines in social events, in investing, wallflowers are s...
A wash occurs when two actions cancel each other out (such as a gain and an equal loss), effectively creating a break-even situation. Let's assume XYZ Company sells $1,000 worth of products. If thes...
A wash sale occurs when an investor sells a security at a loss but then purchases the same or a substantially similar security within 30 days of the sale. Let's assume an investor owns 100 shares of...
Wash trading occurs when an investor sells a security at a loss, then purchases the same or a substantially similar security within 30 days of the sale. Let's assume an investor owns 100 shares of X...
A wasting asset is a property or security that has a limited life and loses value over its life.  Assets have a useful life, usually based on the period of time that they have productive capacity. ...
Watered stock is stock that is issued at a price far higher than the value of the issuer's assets. In technical terms, watered stock exists when the following is true: Stock price x Shares outstandi...
The weekend effect is a theory that stock prices rise on Monday and fall on Friday. The idea behind the weekend effect is that companies tend to release bad news on Fridays, when the market has the ...
Weighted Average Market Capitalization refers to a stock market index in which larger companies (i.e. with higher market capitalization) have more influence on the index's performance. Various stock...
A trader is said to be "whipsawed" when the price of a security suddenly moves in the opposite direction of a trade that he just placed.  For instance, if a trader buys shares of Apple at $250/shar...
A whisper number is an unofficial, unpublished earnings per share (EPS) forecast for a public company. It is not the same as a consensus estimate. To create a whisper number, somebody (usually a web...
Widow and orphan stocks are low-risk securities that pay high dividends.  Widow and orphan stocks typically maintain their dividend payments to shareholders even through difficult financial times, ...
The Wilshire 5000 Index is considered the "total market index." Designed to track the value of the entire stock market, the index was started in 1974 by Wilshire Associates soon after computers made ...
X
X is an extension to a ticker symbol. It denotes that the security is a mutual fund.   For example, Vanguard offers a variety of mutual funds. The tickers end in X. Many companies have several di...
XDIS is a symbol to indicate that a security is trading ex-dividend (or ex-distribution, as the abbreviation suggests). The ex-dividend date is the day on which all shares bought and sold no longer ...
XRT is an extension to a ticker symbol. It denotes that the security is trading without rights. Stock rights are instruments that companies give to shareholders. They allow shareholders to buy more ...
XW is a ticker-symbol extension that signifies that a stock is trading ex-warrant. Warrants are securities that give the holder the right, but not the obligation, to buy a certain number of securiti...
Y
Y is a ticker-symbol extension that signifies that a stock is an American Depository Receipt. Issued by U.S. banks, American Depository Receipts (ADRs) are certificates that represent shares of a fo...
Yankee Market is slang for the U.S. stock market. People outside the United States are the most common users of this term. Yankee Market is often used in conjunction with "the bulldog market," which...
Yo-yo is slang describing volatility in the market. In a mathematical sense, standard deviation is a measure of how much an investment's returns can vary from its average return. That is, it is a me...
Z
Z is an extension to a ticker symbol. It denotes that the security is either a special class of preferred stock, a stub security, represents a limited partnership interest or is a special class of wa...
A zero-beta portfolio is a portfolio built with zero systematic risk. The investments comprised in a zero-beta portfolio are chosen in such a way that the portfolio's value does not fluctuate as a r...
Also called a zero downtick, a zero minus tick is a trade that occurs at the same price as the trade preceding it but lower than the last trade at a different price. A zero minus tick is the opposite...
Also called a zero uptick, a zero plus tick is a trade that occurs at the same price as the trade preceding it but higher than the last trade at a different price. A zero plus tick is the opposite of...