Glossary of Financial Terms

The total number of shares of a security that have been sold short but not yet covered or closed, indicating investor sentiment about future price movements.

A rapid increase in the price of a stock or asset caused by short sellers rushing to buy shares to cover their positions, often triggered when the price unexpectedly rises, leading to significant upward momentum.

A method of calculating interest where the interest is earned only on the principal amount, without compounding, calculated using the formula: Interest = Principal × Rate × Time.

The difference between the expected price of a trade and the actual price at which the trade is executed, often occurring in fast-moving or illiquid markets.

Refers to companies with a market capitalization typically under $2 billion, often characterized by higher growth potential but also higher risk and volatility compared to larger companies.

The act of buying or selling an asset with the expectation of profiting from future price changes, often involving higher risk due to uncertainty rather than underlying fundamentals.

A speculative trading strategy where traders bet on the price movement of an asset without actually owning it, profiting or losing based on the accuracy of their predictions relative to the spread set by the bookmaker.

A trading strategy that involves simultaneously buying and selling related financial instruments, such as futures contracts or options, to profit from the price difference (spread) between them.

A type of security that represents ownership in a corporation, giving shareholders a claim on part of the company’s assets and earnings. Stocks are also known as shares or equity and can provide returns through dividends and capital appreciation.

A corporate action that increases the number of a company’s outstanding shares by dividing each share, reducing its price proportionally while maintaining the overall market capitalization. Companies often split their stock to make shares more affordable for investors, increase liquidity, and broaden their shareholder base.

A deliberate market move designed to trigger stop-loss orders placed by traders at predictable levels, often resulting in increased volatility and a temporary price reversal.

An order to buy or sell a security once it reaches a specified price, known as the stop price, which triggers the order to become a market order.

A combination of a stop order and a limit order, where a specified stop price triggers a limit order to buy or sell a security at a designated limit price or better.

An options trading strategy that involves buying both a call option and a put option with the same strike price and expiration date, allowing the trader to profit from significant price movement in either direction.

An options trading strategy that involves buying a call option and a put option with different strike prices but the same expiration date, allowing the trader to profit from significant price movements in either direction while potentially lowering the cost compared to a straddle.

The total quantity of a financial asset available for sale at a given price, representing the level at which sellers are willing to sell, often influencing price movements when matched with demand.

A price level at which an asset tends to stop falling and may reverse direction, as buying interest increases, creating a "floor" where demand is strong enough to halt a decline.

A peak point on a price chart where the price reaches a high before reversing direction, indicating potential resistance in an upward trend.

A trading strategy that aims to capture short- to medium-term price movements by holding positions for several days to weeks, typically based on technical analysis of price trends and patterns.

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Technical Analysis - A method of evaluating securities by analyzing statistical trends from trading activity, such as price movements and volume, to predict future price behavior and identify trading opportunities.

Tax Free Savings Account - A Canadian savings account that allows individuals to earn investment income tax-free, with contributions not being tax-deductible, but withdrawals, including gains, are also tax-free.

A type of savings or investment account where taxes on earnings, such as interest, dividends, and capital gains, are postponed until withdrawals are made, typically found in retirement accounts like IRAs or 401(k)s.

A method of evaluating securities by analyzing statistics generated by market activity, such as past prices and volume, to forecast future price movements and identify trading opportunities.

A unique series of letters assigned to a security or stock for trading purposes, used to identify and represent the company on stock exchanges.

A digital asset created on a blockchain that represents ownership, access, or utility within a network, application, or ecosystem, rather than being a standalone currency.

WSTM rule: Stop trading after -4R loss, max gains at 4R.

A record-keeping tool or journal used by traders to document their trades, including details such as entry and exit points, position size, strategies used, and outcomes, helping to analyze performance and improve future trading decisions.

A software application or online interface provided by brokers that allows traders and investors to buy, sell, and manage financial instruments, such as stocks, options, and currencies, often featuring tools for analysis, charting, and risk management.

The area between a defined support level and a resistance level where an asset’s price tends to move back and forth, indicating consolidation and a lack of clear direction in the market.

A popular web-based charting and social trading platform that provides real-time market data, technical analysis tools, and charting capabilities for stocks, forex, cryptocurrencies, and other financial instruments, allowing users to share ideas and strategies within a trading community.

A type of stop order that adjusts automatically as the market price of a security moves in a favorable direction, allowing for profit protection while still enabling gains as long as the price continues to rise (for long positions) or fall (for short positions).

A market environment where prices consistently move in one direction (either upward or downward) over a sustained period, characterized by a series of higher highs and lows (uptrend) or lower highs and lows (downtrend).

A straight line drawn on a price chart that connects two or more significant price points, used in technical analysis to represent the direction of an asset's trend, whether upward, downward, or sideways.

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Upthrust After Distribution - A price action pattern that indicates a potential reversal from bullish to bearish, characterized by a sudden upward price movement followed by a strong decline, suggesting that sellers are gaining control after a distribution phase.

The condition in which individuals who are capable of working and actively seeking work are unable to find a job, typically measured as a percentage of the total labor force. It is an important economic indicator of labor market health and economic stability.

A market condition characterized by a series of higher highs and higher lows, indicating sustained upward momentum and increasing prices over time.

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Volatility Index - A market index that measures the expected volatility of the S&P 500 index options over the next 30 days, often referred to as the "fear gauge" because it reflects market sentiment regarding future volatility.

Volume Price Analysis - A trading method that examines the relationship between price movements and trading volume to assess market strength, identify trends, and anticipate potential reversals based on supply and demand dynamics.

Volume Point of Control - The price level with the highest trading volume over a specified period, indicating where the most significant trading activity occurred and often used to identify key support and resistance levels in market analysis.

Volume-Weighted Average Price - A trading indicator that calculates the average price of a security throughout the trading day, weighted by volume, providing insight into the average price at which a security has traded over a specific period.

A trading strategy that involves using the Volume-Weighted Average Price (VWAP) as a dynamic support or resistance level; traders aim to enter positions when the price deviates significantly from the VWAP and then reverts back, capturing potential reversals or momentum moves.

An investment strategy that involves selecting stocks that appear to be undervalued in the market, with the expectation that their true value will be recognized over time, leading to capital appreciation.

A form of private equity financing provided to early-stage, high-potential startup companies, typically in exchange for equity ownership, with the aim of generating significant returns as the business grows.

A pooled investment vehicle that invests in startup and early-stage companies, providing them with capital in exchange for equity or convertible debt, typically managed by a firm specializing in venture capital investments.

A measure of how quickly and widely an asset’s price moves over a given period, reflecting the level of uncertainty or risk in the market.

A market indicator that measures expected future market volatility based on options pricing, commonly used to gauge investor fear or uncertainty (for example, the VIX for the S&P 500).

The total number of shares or contracts traded for a specific security or market during a given period, indicating the level of activity and liquidity in that market.