Stock market glossary
Stock news is full of short words that sound harder than they are. Here are the ones you will meet most, in plain English. Each links to a longer guide when there is one.
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A
- Ask price
- The lowest price a seller will accept for a share right now. It is the price you pay when you buy at once. Read more →
B
- Bear market
- A long fall in stock prices, usually 20% or more from a recent high. Investors feel gloomy about what comes next. Read more →
- Bid price
- The highest price a buyer will pay for a share right now. It is the price you get when you sell at once. Read more →
- Blue chip
- A large, long-established company with a steady record. Think of household names that have paid investors for decades.
- Bond
- A loan you make to a company or government. It pays you interest and returns your money on a set date. Read more →
- Bond yield
- The yearly return you earn from a bond, shown as a percentage. Yields rise when bond prices fall. Read more →
- Brokerage account
- The account you use to buy and sell stocks. A broker holds your investments and carries out your orders. Read more →
- Bull market
- A long rise in stock prices. Investors feel confident and more people buy. Read more →
- Buyback
- When a company buys its own shares from investors. Fewer shares are left, so each remaining share owns a bigger slice. Read more → Latest news →
C
- Capital gain
- The profit you make when you sell an investment for more than you paid. You may owe tax on it.
- Cash flow
- The money that actually moves in and out of a company. A firm can report a profit and still run short of cash. Latest news →
D
- Day trading
- Buying and selling within the same day to profit from small price moves. It is fast, risky and hard to do well.
- Diversification
- Spreading your money across many investments, so one bad pick does not sink you. It is the main way to lower risk. Read more →
- Dividend
- A share of profit a company pays to its shareholders, usually every three months. Not every company pays one. Read more → Latest news →
- Dividend yield
- The yearly dividend divided by the share price, shown as a percentage. A 3% yield pays $3 a year for every $100 invested. Read more →
- Dollar-cost averaging
- Investing the same amount on a set schedule, such as $100 a month, whatever the price. It spreads out your buying. Read more →
- Dow Jones
- An index of 30 large US companies. It is one of the oldest and most quoted gauges of the market. Read more →
E
- Earnings report
- A company’s update on how much it sold and earned in the last three months. Stocks often move sharply when it comes out. Read more →
- EBITDA
- Profit before interest, tax and some costs that do not use cash. Analysts use it to compare how well companies run their business. Latest news →
- EPS
- Earnings per share: a company’s profit divided by its number of shares. It shows how much profit each share earned. Latest news →
- ETF
- An exchange-traded fund. It holds many stocks in one package that you can buy and sell like a single share. Read more →
- Ex-dividend date
- The cut-off day for a dividend. If you buy on or after it, the next payment goes to the previous owner. Read more →
- Expense ratio
- The yearly fee a fund charges, shown as a percentage of your money. A lower number leaves more for you. Read more →
G
- Guidance
- A company’s own forecast for its coming sales and profit. Stocks often move more on guidance than on past results. Latest news →
I
- Index
- A list of stocks used to track a part of the market, such as the S&P 500. It shows how that group is doing. Read more →
- Index fund
- A fund that simply copies an index. It holds the same stocks, so it needs no stock picking and costs little. Read more →
- Inflation
- The rate at which prices rise over time. When it is high, your money buys less than before. Read more →
- Insider trading
- Trading with secret information the public does not have. It is illegal. Reports of ordinary, legal trades by executives are also called insider trades. Latest news →
- IPO
- An initial public offering: the first time a company sells its shares to the public. After it, anyone can buy the stock. Read more → Latest news →
L
- Limit order
- An order to buy or sell only at a price you choose, or better. It may not fill if the price never gets there. Read more →
- Liquidity
- How easily you can buy or sell something without moving its price. Big popular stocks are very liquid.
M
- M&A
- Mergers and acquisitions: deals where companies join together or one buys another. Deal news often moves both stocks. Latest news →
- Margin trading
- Borrowing money from your broker to buy more stock. It can magnify gains, but it magnifies losses too.
- Market cap
- Market capitalization: the price of one share times the number of shares. It is the total value the market puts on a company. Read more → Latest news →
- Market order
- An order to buy or sell right away at the best price on offer. It fills fast, but the final price can differ from what you saw. Read more →
- Mutual fund
- A fund that pools money from many people and invests it for them. Unlike an ETF, it trades once a day. Read more →
N
- Nasdaq
- A US stock exchange known for technology companies. The Nasdaq index tracks the biggest names listed there. Read more →
O
- Option
- A contract that gives you the right to buy or sell a stock at a set price by a set date. Options are risky for beginners.
P
- P/E ratio
- The share price divided by earnings per share. A high number means investors are paying a lot for each dollar of profit. Read more →
- Portfolio
- All the investments you own, taken together. A good portfolio mixes different kinds of assets. Read more →
- Pre-market
- Trading that happens before the market opens at 9:30 a.m. Eastern. Prices can jump on early news, and fewer people trade. Read more →
- Price target
- An analyst’s guess at where a stock will trade in a year. Targets change often and are often wrong. Latest news →
- Profit margin
- The share of each sales dollar a company keeps as profit. A 10% margin means 10 cents of profit per dollar sold. Latest news →
R
- Recession
- A period when the economy shrinks for several months. Jobs and company profits usually fall. Read more →
- Revenue
- All the money a company brings in from sales, before costs. It is also called the top line. Latest news →
S
- S&P 500
- An index of 500 of the largest US companies. It is the most common way to judge how the US market is doing. Read more →
- Sector
- A group of companies in the same line of business, such as technology, health care or energy. Read more →
- Short selling
- Betting that a stock will fall. You borrow shares, sell them, and hope to buy them back cheaper. Losses can be unlimited. Read more →
- Spread
- The gap between the bid and the ask price. A smaller spread means a cheaper trade. Read more →
- Stock split
- When a company divides each share into several, so the price per share drops. Your total value stays the same. Read more →
T
- The Fed
- The Federal Reserve, the US central bank. It sets interest rates, and its choices move stocks and bonds. Read more →
- Ticker symbol
- The short code that identifies a stock, such as AAPL for Apple. You use it to look up and trade a company. Read more →
V
- Valuation
- An estimate of what a company is worth. A stock is called expensive or cheap by comparing its price with that value. Latest news →
- Volatility
- How much and how fast a price swings. A volatile stock can jump or fall sharply in a day. Read more →
- Volume
- The number of shares traded in a day. High volume means many people are buying and selling. Read more →
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Informational only, not financial advice. Content is AI-generated and may contain errors. How this works.