Glossary of Financial Terms

Optimal Trade Entry – A Fibonacci-based entry concept, usually the 62–79% retracement zone of a price swing, considered a high-probability entry area.

The total number of outstanding derivative contracts, such as options or futures, that have not been settled or closed, indicating market activity and liquidity.

A listing of all available options contracts for a particular security, displaying various strike prices, expiration dates, and details such as bid and ask prices, volume, and open interest.

A real-time list of buy and sell orders for a specific security, organized by price level, showing the current demand and supply in the market. Often referred to as Level 2 (L2) data.

An option that has no intrinsic value; for a call option, the current price of the underlying asset is below the strike price, and for a put option, it is above the strike price.

A candlestick pattern where the entire price range of a trading day (the high and low) is outside the range of the previous day, indicating potential reversal or continuation of the current trend.

A financial situation where a bank account balance goes below zero, allowing the account holder to withdraw more money than is available, often incurring fees or interest charges.

The ongoing business expenses that are not directly attributed to creating a product or service, such as rent, utilities, salaries of non-production staff, and other administrative costs, essential for the overall operation of a business.

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Price-to-Earnings Ratio - A valuation metric calculated by dividing the current share price of a company by its earnings per share (EPS), used to assess the relative value of a company's stock.

Price Action - The movement of a security's price over time, used in technical analysis to make trading decisions based on historical price patterns and trends rather than indicators.

Previous Day Close - The last trading price of a security at the end of the previous trading day, used as a reference point for current market analysis.

Previous Day High – The highest price reached during the prior trading session, often used as a liquidity or breakout reference.

Previous Day Low – The lowest price reached during the prior trading session, often used as a liquidity or breakout reference.

Purchasing Managers’ Index - An economic indicator that measures the health of the manufacturing and service sectors based on surveys of purchasing managers, indicating overall economic activity and business conditions.

Power of Three – ICT concept where markets accumulate, manipulate, then distribute, often within a daily or weekly price cycle.

Point of Control - The price level at which the highest volume of trading occurred during a specific time period, indicating a significant level of support or resistance in market analysis.

Point of Interest – A specific chart area identified as important for potential entries or reactions, often aligned with institutional concepts like OBs or FVGs.

Profit Target - A predetermined price level at which a trader plans to close a position to realize gains, often set based on technical analysis or percentage returns.

Earnings generated with minimal active involvement, often from investments like dividends, rental properties, or royalties, providing a steady cash flow over time.

The percentage of a company's earnings that is distributed to shareholders as dividends, calculated by dividing the total dividends paid by the net income.

A low-priced stock, typically trading for less than $5 per share, often characterized by high volatility and low market capitalization, making them riskier investments.

A candlestick pattern characterized by a long wick and a small body, indicating a potential reversal or rejection of a price level, with the wick representing a sharp rejection of higher or lower prices.

A collection of financial assets held by an individual or institution, such as stocks, bonds, cash, real estate, or other investments, aimed at achieving specific financial goals and managing risk through diversification.

The process of determining the amount of capital to allocate to a particular trade or investment, based on the trader's risk tolerance and the specifics of the trade, to manage overall portfolio risk effectively.

A type of stock that typically offers fixed dividends and has priority over common stock in terms of dividend payments and asset liquidation in the event of company bankruptcy. However, it usually does not provide voting rights to shareholders.

The financial market where new securities are issued and sold directly to investors by the issuer, such as during an Initial Public Offering (IPO).

A temporary reversal or pause in the direction of an asset's price trend, usually within an overall uptrend, offering potential entry opportunities before the trend resumes.

A financial contract that gives the holder the right, but not the obligation, to sell an underlying asset at a specified price within a designated time frame.

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Quarters of the fiscal year.

The Invesco QQQ Trust, an exchange-traded fund (ETF) that tracks the performance of the Nasdaq-100 Index, consisting of 100 of the largest non-financial companies listed on the Nasdaq Stock Market.

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Reward unit in R/R ratio—e.g., 1R = risk amount, 4R = 4x risk profit.

Risk/Reward Ratio - A measure used by traders to compare the potential profit of a trade to the potential loss, helping to assess whether the trade is worth taking based on their risk tolerance.

Real Estate Investment Trust - A company that owns, operates, or finances income-producing real estate, allowing investors to buy shares and receive a portion of the income generated, typically in the form of dividends.

Registered Education Savings Plan - A Canadian tax-advantaged savings plan designed to help families save for a child's post-secondary education, allowing contributions to grow tax-free until withdrawn for educational expenses.

Return on Assets - A financial ratio that indicates how efficiently a company uses its assets to generate profit, calculated as Net Income divided by Total Assets.

Return on Equity - A financial metric that measures a company's profitability by revealing how much profit is generated for each dollar of shareholders' equity, calculated by dividing net income by shareholder equity.

Return on Investment - A performance metric used to evaluate the profitability of an investment, calculated as the net profit divided by the initial cost of the investment, expressed as a percentage.

Regret Of Missing Out - The feeling of regret or anxiety experienced by investors or traders who miss a profitable opportunity, often leading to impulsive decision-making in future trades.

Registered Retirement Savings Plan - A Canadian tax-advantaged savings plan that allows individuals to save for retirement while deferring taxes on contributions and investment income until withdrawal.

Relative Strength Index - A momentum oscillator that measures the speed and change of price movements, typically used to identify overbought or oversold conditions in a security on a scale of 0 to 100.

Real-Time Gross Settlement - A system for transferring money from one bank to another on a real-time and gross basis, where transactions are settled individually and immediately, typically used for large-value transactions.

Regular Trading Hours - The standard hours during which the major stock exchanges are open for trading, typically from 9:30 AM to 4:00 PM Eastern Time in the U.S..

Relative Volume - A trading indicator that measures the current trading volume of a stock compared to its average volume over a specific period, highlighting unusual activity or investor interest.

A savings reserve set aside to cover unexpected expenses or financial emergencies, providing a financial cushion in times of need.

The purchase of property or real estate assets with the expectation of generating income or appreciation, which can include residential, commercial, or industrial properties.

A price level where an asset tends to stop rising and may reverse downward, as selling interest increases, creating a "ceiling" where supply is strong enough to halt an upward move.

An individual who buys and sells financial securities, such as stocks, bonds, or derivatives, for their personal account rather than on behalf of an institution, typically using brokerage platforms and trading in smaller volumes compared to institutional investors.