Financial Glossary

A measure of an investment's performance relative to a benchmark index. Positive alpha indicates the investment outperformed the benchmark.

A market condition where prices fall 20% or more from recent highs, typically accompanied by widespread pessimism and negative investor sentiment.

A measure of a stock's volatility relative to the overall market. A beta of 1 means the stock moves with the market; above 1 means more volatile; below 1 means less volatile.

Stock of a large, well-established, and financially sound company with a history of reliable performance. Examples include Apple, Microsoft, and Johnson & Johnson.

A technical analysis tool consisting of a middle band (moving average) and two outer bands set at standard deviations above and below. Used to identify overbought or oversold conditions.

A market condition characterized by rising prices and optimism. Generally defined as a 20% or greater rise from recent lows.

A type of financial chart that displays the high, low, opening, and closing prices of a security for a specific period. Each candle shows price action with color indicating direction.

A portion of a company's earnings distributed to shareholders, usually on a quarterly basis. Expressed as a dollar amount per share or as a yield percentage.

An investment strategy where a fixed dollar amount is invested at regular intervals regardless of the share price, reducing the impact of volatility over time.

An investment fund traded on stock exchanges that holds a collection of assets like stocks, bonds, or commodities, offering diversification with the liquidity of individual stocks.

A company's net profit divided by the number of outstanding common shares. A key metric for evaluating profitability and comparing companies.

Cash generated by a company after accounting for capital expenditures. A key metric for evaluating a company's financial health and ability to pay dividends or reduce debt.

A pooled investment fund that employs various strategies (including leverage, derivatives, and short selling) to generate returns for accredited investors.

The first time a private company offers shares of stock to the public. IPOs allow companies to raise capital from public investors.

A type of mutual fund or ETF designed to track the performance of a specific market index, such as the S&P 500, offering broad diversification at low cost.

A trend-following momentum indicator that shows the relationship between two moving averages of a security's price. Used to identify potential buy and sell signals.

Borrowed money from a brokerage to purchase securities. Buying on margin amplifies both gains and losses and requires maintaining a minimum account balance.

The total market value of a company's outstanding shares. Calculated by multiplying share price by total shares outstanding. Used to classify companies as large-cap, mid-cap, or small-cap.

A technical indicator that smooths price data by creating a constantly updated average price over a specific time period (e.g., 50-day or 200-day moving average).

A valuation ratio calculated by dividing a stock's current price by its earnings per share. Used to determine if a stock is over- or under-valued relative to its earnings.

A collection of financial investments such as stocks, bonds, commodities, and cash equivalents held by an individual or institution.

A momentum oscillator ranging from 0-100 that measures the speed and magnitude of price movements. Readings above 70 suggest overbought conditions; below 30 suggest oversold.

A price level at which selling pressure is historically strong enough to prevent the price from rising further. A key concept in technical analysis.

An investment strategy that involves moving money from one industry sector to another in an attempt to beat the market based on economic cycle positioning.

An investment strategy where an investor borrows shares and sells them, hoping to buy them back at a lower price. Profit comes from the price difference minus borrowing costs.

An order placed with a broker to sell a security when it reaches a certain price, designed to limit an investor's loss on a position.

A price level at which buying interest is historically strong enough to prevent the price from declining further. The opposite of resistance.

A statistical measure of the dispersion of returns for a given security or market index. Higher volatility means greater price fluctuations and typically higher risk.

The total number of shares or contracts traded during a given period. High volume often confirms the strength of a price move.

The income return on an investment, typically expressed as a percentage. For stocks, it usually refers to the annual dividend divided by the stock price.