Glossary of Financial Terms

Data-driven trading or investment systems that use mathematical models, statistical analysis, and algorithms to identify, execute, and manage trades with minimal human discretion.

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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designed to help families save for a child's post-secondary education, allowing contributions to grow tax-free until withdrawn for educational expenses.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.

Funds set aside during an individual's working life, typically in tax-advantaged accounts, to provide income and financial security in retirement.

A chart formation that indicates a change in the direction of the price trend, suggesting that a security may reverse its current upward or downward trajectory.

A corporate action that reduces the number of a company’s outstanding shares by combining them, increasing the stock price proportionally, while maintaining the overall market capitalization. Companies typically execute a reverse stock split to meet stock exchange listing requirements, improve perceived value, or attract institutional investors by raising the stock price.

The degree of variability in investment returns that an investor is willing to withstand in their investment portfolio, reflecting their ability and willingness to endure potential losses.

Individual Retirement Account - A type of individual retirement account that allows individuals to contribute after-tax income, enabling tax-free withdrawals in retirement, provided certain conditions are met.

A nine-digit code used in the United States to identify a specific financial institution for processing transactions such as checks and electronic transfers.

A simple formula used to estimate the number of years required to double an investment at a fixed annual rate of return by dividing 72 by the expected annual rate of return.

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Standard & Poor's - A financial services company known for its stock market indices, most notably the S&P 500, which tracks the stock performance of 500 large publicly traded companies in the U.S.

A stock market index that tracks the performance of 500 large, publicly traded companies in the United States, often used as a benchmark for the overall U.S. stock market and a gauge of economic health.

Securities and Exchange Commission - A U.S. government agency responsible for regulating the securities industry, enforcing federal securities laws, and protecting investors by ensuring fair and efficient markets.

Simplified Employee Pension Individual Retirement Arrangement - A type of retirement plan that allows employers to make tax-deductible contributions to their employees' retirement savings, providing a simple and cost-effective way to save for retirement.

Stop Loss - An order placed to sell (or cover) a security when it reaches a specific price, designed to limit an investor's loss on a position.

Simple Moving Average - A type of moving average that calculates the average price of a security over a specific number of periods, giving equal weight to each price in the calculation.

SPDR S&P 500 ETF Trust - An exchange-traded fund that aims to track the performance of the S&P 500 Index, allowing investors to gain exposure to a diversified portfolio of 500 of the largest publicly traded companies in the U.S.

Sell Side Imbalance – An area on the chart where aggressive selling left behind inefficiency in price, often used as a retracement target.

Sell Side Liquidity – Liquidity resting below recent lows, where stop-loss orders from longs and breakout sell stops accumulate.

Short Term - A term used to describe investments or financial strategies that are intended to be held for a brief period, typically less than one year, often focusing on quick profits or liquidity.

Stochastic Oscillator - A momentum indicator used in technical analysis to compare a security's closing price to its price range over a specific period, helping traders identify overbought or oversold conditions.

A standardized international bank code used to identify specific banks and financial institutions worldwide, facilitating secure and efficient cross-border transactions.

A deposit account held at a financial institution that allows individuals to earn interest on their balance while providing easy access to funds for withdrawal or transfer.

The percentage of disposable income that individuals save rather than spend, often used as an indicator of financial health and economic stability.

A trading strategy that involves making numerous short-term trades to profit from small price changes, often executed within minutes or seconds.

The financial market where previously issued securities are traded among investors, such as on major stock exchanges like the NYSE (New York Stock Exchange) and Nasdaq, without direct involvement from the issuing company.

An investment strategy that involves moving investments among different sectors of the economy to capitalize on economic cycles and market trends, aiming to maximize returns and minimize risk.

The initial funding used to start a business, typically provided by the founders, friends, family, or early investors to cover startup expenses before the company generates revenue.

Placing a sell order at the current ask price, usually indicating a desire to exit a position quickly by matching the price that buyers are currently willing to pay. This can be a sign of urgency or liquidity in selling, but it’s less common than selling at the bid.

Placing a sell order at the current bid price, which is the highest price a buyer is willing to pay. This approach is considered bearish, as it indicates urgency to sell and a willingness to accept a lower price to exit the position quickly, often contributing to downward pressure on the asset's price.

A company's repurchase of its own shares from the marketplace, often to reduce the number of outstanding shares, increase shareholder value, or improve financial ratios.

A trading position where a trader sells an asset they do not own, borrowing it with the expectation that its price will decline, allowing them to buy it back at a lower price for a profit.

The act of buying shares to close an existing short position, often accelerating price moves higher as sellers are forced to become buyers.