Glossary of Financial Terms

The difference between the highest and lowest price of a security during a single trading day.

Buying and selling financial instruments within the same trading day.

A bearish technical pattern that occurs when a short-term moving average (typically the 50-day) crosses below a long-term moving average (typically the 200-day), signaling potential downward momentum and a possible trend reversal to the downside.

An entry recording an amount owed or a withdrawal from a bank account, indicating a decrease in assets or an increase in liabilities. In accounting, it is used to signify the left side of an account ledger.

A financial ratio that indicates the relative proportion of shareholders' equity and debt used to finance a company.

An option with a strike price significantly below (for calls) or above (for puts) the current market price of the underlying asset, making it highly likely to be exercised.

Sensitivity of an option’s price to a $1 change in the underlying asset.

The total quantity of a financial asset that buyers are willing to purchase at a given price, often driving price movements when it exceeds or falls short of supply.

Financial contracts whose value is derived from an underlying asset.

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A phase in the market cycle where large investors begin selling off their positions, often gradually, leading to a shift from an uptrend to a downtrend as selling pressure increases and supply outweighs demand.

The investment strategy of spreading assets across various sectors, industries, or asset classes to reduce risk.

A financial ratio that shows the annual dividend payment as a percentage of the stock's current market price.

Regular payments made by a company to its shareholders, typically drawn from profits, as a way to distribute a portion of the company's earnings. They can be issued as cash, additional shares, or other forms, and are usually paid on a quarterly or annual basis.

A market condition characterized by a series of lower highs and lower lows, indicating sustained downward momentum and decreasing prices over time.

The peak-to-trough decline in the value of an investment.

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Earnings Before Interest, Taxes, Depreciation, and Amortization - A measure of a company's operating performance, indicating earnings from core operations before accounting for interest, taxes, depreciation, and amortization.

Electronic Communication Network - An automated system that matches buy and sell orders for securities in the financial markets, allowing direct trading without a traditional exchange.

Exponential Moving Average - A type of moving average that gives more weight to recent prices, making it more responsive to new information compared to the simple moving average.

A trading signal that occurs when a shorter-term EMA crosses above or below a longer-term EMA, indicating potential bullish or bearish momentum.

End of Day - The closing time of regular trading hours in financial markets, typically at 4:00 PM EST for U.S. stock exchanges.

Earnings Per Share - A financial metric that indicates a company's profitability, calculated by dividing net income by the total number of outstanding shares.

Equal Highs – A technical pattern where two or more highs form at the same level, often seen as liquidity resting above those highs.

Equal Lows – A technical pattern where two or more lows form at the same level, often seen as liquidity resting below those lows.

Earnings Report - A financial statement released by a company to reveal its performance over a specific period, including revenue, expenses, and net income, usually quarterly or annually.

Environmental, Social, and Governance Investing - An investment approach that considers a company’s environmental, social, and governance factors alongside financial returns.

Exchange-Traded Fund - An investment fund that trades on stock exchanges, holding a diversified portfolio of assets like stocks, bonds, or commodities.

Extended Trading Hours - The period before and after the regular trading session when stocks can be traded, usually pre-market and after-hours.

Exchange-Traded Note - A debt security issued by a financial institution that tracks the performance of an underlying index or asset, but without actual ownership of the asset.

A conference call where a public company discusses financial performance.

The period, occurring four times a year, when most publicly traded companies release their quarterly financial reports.

Savings set aside to cover unexpected expenses or financial emergencies, typically amounting to three to six months of living expenses.

The date when a stock starts trading without the value of its next dividend payment.

The risk that a trade order may not be executed at the expected price due to market volatility, delays, or insufficient liquidity.

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Fundamental Analysis - A method of evaluating a financial asset's intrinsic value by analyzing factors like financial statements, industry trends, and economic conditions.

Facebook, Apple, Amazon, Netflix, Google (now Meta, Apple, Amazon, Netflix, Alphabet).

Federal Deposit Insurance Corporation - A U.S. government agency that provides insurance to depositors in commercial banks and savings institutions, protecting up to $250,000 per depositor, per bank.

Federal Reserve - The central bank of the United States, responsible for setting national monetary policy, regulating banks, maintaining financial stability, and providing financial services to the government and financial institutions.

Federal Open Market Committee - The branch of the Federal Reserve responsible for setting U.S. monetary policy, including interest rates and open market operations, with the goal of promoting economic stability, maximum employment, and price stability.

Fear of Missing Out—don’t let panic crash your savings party!

Financial Times Stock Exchange Index - A series of stock market indices that track the performance of companies listed on the London Stock Exchange, with the FTSE 100 being the most well-known.

Fair Value Gap – An inefficiency in price action where a candle leaves a gap between its wicks due to imbalance between buyers and sellers, often expected to be “filled” later.

A technical analysis tool that uses horizontal lines to indicate areas of support or resistance.

A series of numbers where each number is the sum of the two preceding ones, starting from 0 and 1 (e.g., 0, 1, 1, 2, 3, 5, 8, 13, etc.), commonly used in trading to identify potential retracement and extension levels based on the "golden ratio" of 1.618.

An order that must be executed immediately or canceled.

A type of investment that provides regular, predetermined returns, such as interest or dividends, over a specified period. Examples include bonds, treasury notes, and certificates of deposit (CDs), where investors receive consistent payments until maturity.

The total number of shares of a company that are available for trading by the public, excluding restricted shares held by insiders or employees.