Glossary of Financial Terms

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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.

A technical analysis tool used to identify potential intraday support and resistance levels, calculated based on the previous trading session's high, low, and close prices, with the central pivot point serving as a reference for market sentiment.

Foreign Exchange Market - A global decentralized market for trading currencies, where participants buy, sell, and exchange currencies at current or determined prices.

The unethical practice of executing orders for a security based on advance knowledge of pending transactions that will affect its price.

A method of evaluating an asset’s intrinsic value by examining related economic, financial, and qualitative factors—such as a company’s earnings, revenue, growth potential, management, and industry conditions—to determine whether it is overvalued or undervalued.

Refers to assets that are interchangeable and identical in value, meaning one unit can be easily replaced by another of the same kind, such as stocks, bonds, or currency. For example, one share of Apple (AAPL) is identical to any other share of AAPL, making it fully interchangeable.

Financial contracts obligating the buyer to purchase, or the seller to sell, an underlying asset (such as commodities, currencies, or indices) at a predetermined price and date, commonly used for hedging or speculative purposes.

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Gross Domestic Product - The total monetary value of all goods and services produced within a country's borders over a specific time period, used to measure economic performance.

A measure of the rate of change in an option's delta relative to a one-point change in the price of the underlying asset, indicating the option’s sensitivity to price movements.

A trading strategy that involves adjusting a delta-neutral options position to profit from changes in an option’s gamma as the underlying asset's price fluctuates.

A bullish technical pattern that occurs when a short-term moving average (typically the 50-day) crosses above a long-term moving average (typically the 200-day), signaling potential upward momentum and a possible trend reversal to the upside.

A retracement area between the 50% and 61.8% levels of a prior impulse move where trends frequently resume.

An order to buy or sell a security that remains active until it is either executed or manually canceled by the trader.

An investment strategy focused on buying stocks or assets of companies expected to grow at an above-average rate compared to others in the market.

Stock of a company expected to grow at an above-average rate.

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Home Equity Line of Credit - A revolving line of credit secured by the equity in a homeowner's property, allowing them to borrow funds as needed up to a set limit.

High-Frequency Trading - A type of algorithmic trading that uses powerful computers to execute large numbers of orders at extremely high speeds, often within fractions of a second.

High of Day - The highest price that a financial asset reaches during the current trading session.

Higher Time Frame – Refers to charts with longer time horizons (daily, weekly, monthly) used to identify overall market context and trend direction.

An investment to reduce the risk of adverse price movements in an asset.

An investment partnership that pools capital from accredited or institutional investors and uses advanced strategies such as leverage, short selling, derivatives, and arbitrage to generate returns in both rising and falling markets.

A savings account that offers a higher interest rate than traditional savings accounts, allowing funds to grow faster.

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Initial Balance - The price range established during the first hour of trading, used by traders to identify key support and resistance levels, as well as potential breakout or reversal points for the trading day.

Interactive Brokers - A global brokerage firm that provides a trading platform for a wide range of financial instruments, including stocks, options, futures, and forex, known for its low-cost trading, advanced tools, and broad market access.

International Bank Account Number - A standardized international system of identifying bank accounts across national borders, facilitating international money transfers.

Intellectual Property - A legal concept that refers to creations of the mind, such as inventions, literary and artistic works, designs, symbols, names, and images used in commerce, granting the creator exclusive rights to use and exploit their creations.

Initial Public Offering - The process by which a private company offers shares to the public for the first time, allowing it to raise capital from public investors.

Individual Retirement Account - A tax-advantaged savings account designed to encourage individuals to save for retirement, with various types including Traditional IRA and Roth IRA.

Internal Rate of Return - The discount rate that makes the net present value (NPV) of all cash flows from an investment equal to zero, used to evaluate the profitability of potential investments.

An order that must be executed immediately, but any portion that cannot be filled will be canceled.

A metric that reflects the market's expectations of the future volatility of a security's price, often used in options pricing.

An option that has intrinsic value, meaning for a call option, the current price of the underlying asset is above the strike price; for a put option, it is below the strike price.

A statistical measure that tracks the performance of a group of assets, such as stocks or bonds, often used to represent a specific segment of the market (e.g., S&P 500, Nasdaq 100).

A mutual fund or ETF designed to track the performance of a specific index.

Benchmarks that track the performance of a group of stocks representing a market, sector, or economy (for example, the S&P 500 or Nasdaq 100) and are used to gauge overall market direction and strength.

The rate at which the general level of prices for goods and services rises over time, leading to a decrease in purchasing power. It reflects how much more expensive goods and services have become, typically measured by indices like the Consumer Price Index (CPI).

A candlestick pattern where the entire price range of a trading day (the high and low) is within the range of the previous day, indicating a period of consolidation.

The process by which interest earned on an investment is reinvested to generate additional interest over time, leading to exponential growth of the principal amount.

The percentage at which interest is charged or paid on borrowed or invested money, typically expressed on an annual basis.

Referring to the trading activity that occurs within a single trading day, often involving the buying and selling of financial instruments before the market closes.