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This glossary is your go-to resource for understanding over 300 essential terms and acronyms used across our Saving, Investing, and Trading courses. Each definition is concise and easy to understand, designed to clarify key concepts and help you build a solid foundation in financial literacy.
The glossary is divided into six sections, corresponding to all the letters of the alphabet. Simply click on the first letter of the term or acronym you're looking for to jump directly to the corresponding section. Use the links throughout the courses to quickly access the definitions you need, when you need them.
glossary - "a"
401(k)
Retirement savings plan sponsored by an employer (USA).
529 Plan
Tax-advantaged savings plan for education (USA).
ACH - "Automated Clearing House"
An electronic network for processing financial transactions, including direct deposits and bill payments, in the U.S.
ADR - "American Depositary Receipt"
A negotiable certificate issued by a U.S. bank representing shares in a foreign company, allowing Americans to trade foreign stocks on U.S. exchanges.
All or None (AON) Order
An order that must be fully executed or not executed at all, without partial fills.
AMC - "After Market Close"
The period of trading that occurs after the regular market session ends.
AMEX - "American Stock Exchange"
A former major U.S. stock exchange, now part of the NYSE, known for trading small-cap stocks, options, and ETFs.
Amortization
The process of gradually paying off a loan over time through scheduled, fixed payments that cover both principal and interest, ultimately resulting in the loan being fully paid off by the end of its term.
APR - "Annual Percentage Rate"
The annual cost of borrowing or earning expressed as a percentage, including interest and fees.
APY - "Annual Percentage Yield"
The annual return on an investment, considering the effect of compounding interest.
AR - "Accounts Receivable"
Money owed to a company by its customers for goods or services delivered but not yet paid for.
ASK
The lowest price at which a seller is willing to sell a security.
Ask Size
The number of shares a seller is offering to sell at the ask price.
Asset
Any resource with economic value that is owned by an individual, corporation, or government, with the expectation that it will provide future benefit. Examples include cash, stocks, real estate, and intellectual property.
Asset Allocation
The strategy of dividing an investment portfolio among different asset categories, such as stocks, bonds, and cash, to balance risk and reward.
At-the-Money (ATM) Option
An option whose strike price is equal to or very close to the current market price of the underlying asset.
ATH - "All Time High"
The highest price ever reached by a security, index, or other financial instrument during its trading history.
ATR - "Average True Range"
A technical indicator that measures market volatility by averaging the range between the high and low prices over a specific period.
AUM - "Assets Under Management"
The total market value of investments that a person or entity manages on behalf of clients.
AVWAP - "Anchored Volume-Weighted Average Price"
A technical indicator that shows the average price of a security, weighted by volume, from a specific starting point or "anchor."
Divider Placeholder
glossary - "B"
B/E - "Break-Even"
The point at which total revenues equal total costs, resulting in neither profit nor loss; in trading, it's the price at which an investment or trade recoups its initial cost.
Backtesting
The process of testing a trading strategy using historical data to evaluate its potential effectiveness.
Bear Flag
A bearish continuation pattern in technical analysis that forms after a sharp downward move, followed by a brief upward consolidation within a narrow, upward-sloping range (resembling a flag), indicating the potential for another downward breakout.
Bear Market
A market condition characterized by a decline of 20% or more in asset prices over a sustained period, often associated with widespread pessimism and negative investor sentiment.
Bear Pennant
A bearish continuation pattern in technical analysis that appears after a strong downward price move, followed by a brief consolidation in a small, symmetrical triangle shape (resembling a pennant), indicating potential for another downward breakout.
Bear Trap
A false market signal that suggests a declining trend, luring traders into short positions before the price reverses upward.
Benchmark
A standard or point of reference, such as a market index like the S&P 500, used to measure the performance of an investment, portfolio, or fund.
Beta
Measure of a stock's volatility relative to the market.
BID
The price buyers are willing to pay for a stock.
Bid Size
The number of shares a buyer is willing to purchase at the bid price.
BID-ASK Spread
Difference between the bid and ask price.
Blue Chip Stock
Stock of a large, stable, and financially sound company.
BMO - "Before Market Open"
The time period before the regular trading session begins.
BOC - "Bank of Canada"
The central bank of Canada, responsible for setting the country's monetary policy, issuing currency, and maintaining financial stability, including managing inflation and interest rates.
BOLL - "Bollinger Bands"
A technical analysis tool using a set of three lines (a moving average and two standard deviations) to identify potential overbought or oversold conditions in a market.
Bond
A fixed-income investment representing a loan made by an investor to a borrower, typically a corporation or government.
Book Value
Total value of a company’s assets minus liabilities.
Bookmap
A trading platform that provides a detailed visualization of the order book, market depth, and price action, offering traders real-time insights into liquidity, supply and demand, and potential price movements using heat maps and volume analysis.
BP - "Buying Power"
The total amount of capital available for a trader to buy securities, including both cash and any margin or leverage provided by a brokerage.
BPS - "Basis Points"
Basis Points - A unit of measurement equal to 0.01%, used to describe changes in interest rates, bond yields, or other financial percentages.
Break-even Point
The price or level at which total revenues equal total costs, resulting in neither profit nor loss.
Breakout
When an asset's price moves decisively above a resistance level or below a support level, often signaling the beginning of a new trend or increased momentum in the direction of the breakout.
Broker
A licensed individual or firm that acts as an intermediary between buyers and sellers in financial markets, facilitating transactions for a fee or commission. Brokers can specialize in various areas, including stocks, bonds, real estate, and insurance.
Budget
A financial plan that outlines expected income and expenses over a specific period, used to allocate resources, manage spending, and achieve financial goals. It helps track cash flow, ensure savings, and control debt.
Bull Flag
A bullish continuation pattern in technical analysis that occurs after a strong upward move, where the price consolidates within a narrow, downward-sloping range (resembling a flag), often signaling the potential for another upward breakout.
Bull Market
A market condition characterized by rising asset prices, typically defined as an increase of 20% or more from recent lows, often driven by investor optimism and strong economic indicators.
Bull Pennant
A bullish continuation pattern in technical analysis that forms after a strong upward price movement, followed by a brief consolidation in a small, symmetrical triangle shape (resembling a pennant), signaling potential for another upward breakout.
Bull Trap
A false signal indicating a rising market trend, luring traders into long positions before the price reverses downward.
Buy and Hold Strategy
An investment strategy where an investor buys securities and holds them long-term, regardless of market fluctuations.
Buying at the Ask
Placing a buy order at the current ask price, which is the lowest price a seller is willing to accept. This approach is often considered bullish, as it indicates strong buying interest and urgency to enter a position at the prevailing price.
Buying at the Bid
Placing a buy order at the current bid price, which is the highest price a buyer is willing to pay. This approach is often associated with short sellers closing their positions, as they aim to buy back shares at the bid to benefit from downward momentum. It is generally seen as bearish or cautious, indicating that buyers are waiting for sellers to lower their prices.
Divider Placeholder
glossary - "C"
Call Option
A financial contract that gives the holder the right, but not the obligation, to buy an underlying asset at a specified price within a set time frame.
Camarilla Pivot
A set of support and resistance levels calculated from the previous day’s trading range, designed to identify potential turning points in the market. It includes eight levels (R1–R4 for resistance and S1–S4 for support), with R3, R4, S3, and S4 being the most critical for trading entries and exits.
Candlestick Chart
A chart that displays the high, low, open, and close prices of a stock.
Candlestick Pattern
A formation of candlesticks on a price chart used in technical analysis to predict future market movements based on past price behavior.
Capex - "Capital Expenditure"
Funds used by a company to acquire, upgrade, or maintain physical assets like property, buildings, or equipment.
Capital Gains
The profit made from selling an asset, such as stocks, bonds, or real estate, for more than its purchase price.
Catalyst
In trading, a catalyst is an event or piece of news that drives significant movement in an asset's price, often creating opportunities for traders due to increased volatility.
CCI - "Commodity Channel Index"
A momentum-based technical indicator used to identify overbought or oversold conditions in an asset.
CD - "Certificate of Deposit"
A low risk savings account that holds a fixed amount of money for a set period, earning interest, with penalties for early withdrawal.
CDIC - "Canada Deposit Insurance Corporation"
A Canadian federal agency that insures eligible deposits at member financial institutions, protecting up to $100,000 per depositor, per category, per institution.
CFD - "Contract for Difference"
A financial derivative that allows traders to speculate on the price movement of assets without owning the underlying asset.
CFRA - "Center for Financial Research and Analysis"
An independent investment research firm that provides analysis on stocks, mutual funds, and other financial instruments.
Churning
Excessive buying and selling of securities by a broker.
Circuit Breaker
A regulatory mechanism that temporarily halts trading on an exchange to prevent extreme volatility when prices move too rapidly in a short period.
Co-Sign
To sign a loan or lease agreement along with another party, taking on joint responsibility for the debt; if the primary borrower defaults, the co-signer is responsible for repaying the loan.
Compounding Returns
The process by which an investment's earnings generate additional earnings over time, as returns are reinvested and begin to grow exponentially.
Cost Basis
The original value or purchase price of an asset, used to determine capital gains or losses when the asset is sold.
Covered Call
A strategy where an investor holds a long position in a stock and sells a call option on that stock.
CPI - "Consumer Price Index"
An economic indicator that measures the average change in prices paid by consumers for goods and services over time, used to track inflation.
CPI - "Consumer Price Index"
An economic indicator that measures the average change over time in the prices paid by consumers for a basket of goods and services, used to track inflation and the cost of living.
CPR - "Central Pivot Range"
A technical analysis tool consisting of three price levels that indicate potential support and resistance areas for a trading session.
Credit
An entry recording an amount received or a deposit into a bank account, indicating an increase in assets or a decrease in liabilities. In accounting, it is used to signify the right side of an account ledger.
Credit Line
A flexible loan from a financial institution that allows a borrower to access funds up to a specified limit as needed.
Credit Score
A numerical rating that represents an individual's creditworthiness, based on their credit history, debt levels, repayment behavior, and other financial factors. It is used by lenders to evaluate the risk of lending money, with scores typically ranging from 300 to 850.
Cross Rate
The exchange rate between two currencies, neither of which is the official currency of the country in which the quote is given.
Cryptocurrency
A digital or virtual currency secured by cryptography, operating on decentralized networks using blockchain technology.
Divider Placeholder
glossary - "D"
Dark Pool
A private, off-exchange trading venue where large orders are executed anonymously, away from the public markets, to minimize price impact.
Day Order
An order to buy or sell a security that expires at the end of the trading day if not executed.
Day Range
The difference between the highest and lowest price of a security during a single trading day.
Day Trading
Buying and selling financial instruments within the same trading day.
DCA - "Dollar Cost Averaging"
An investment strategy where a fixed amount of money is invested regularly, regardless of the asset's price, to reduce the impact of market volatility.
DD - "Due Diligence"
The comprehensive process of researching and analyzing a potential investment, company, or asset before making a decision.
Debit
An entry recording an amount owed or a withdrawal from a bank account, indicating a decrease in assets or an increase in liabilities. In accounting, it is used to signify the left side of an account ledger.
Debt-to-Equity Ratio
A financial ratio that indicates the relative proportion of shareholders' equity and debt used to finance a company.
Deep In-the-Money Option
An option with a strike price significantly below (for calls) or above (for puts) the current market price of the underlying asset, making it highly likely to be exercised.
Delta
Sensitivity of an option’s price to a $1 change in the underlying asset.
Demand
The total quantity of a financial asset that buyers are willing to purchase at a given price, often driving price movements when it exceeds or falls short of supply.
Derivatives
Financial contracts whose value is derived from an underlying asset.
DIASPDR
Dow Jones Industrial Average ETF - An exchange-traded fund that tracks the performance of the Dow Jones Industrial Average, representing 30 large U.S. companies.
Distribution
A phase in the market cycle where large investors begin selling off their positions, often gradually, leading to a shift from an uptrend to a downtrend as selling pressure increases and supply outweighs demand.
Diversification
The investment strategy of spreading assets across various sectors, industries, or asset classes to reduce risk.
Dividend Yield
A financial ratio that shows the annual dividend payment as a percentage of the stock's current market price.
Dividends
Regular payments made by a company to its shareholders, typically drawn from profits, as a way to distribute a portion of the company's earnings. They can be issued as cash, additional shares, or other forms, and are usually paid on a quarterly or annual basis.
DJIA
Dow Jones Industrial Average - A stock market index that tracks the performance of 30 large, publicly traded U.S. companies.
DOM - "Depth of Market"
A real-time list showing the number of buy and sell orders at different price levels for a specific security, providing insight into supply, demand, and liquidity in the market.
Downtrend
A market condition characterized by a series of lower highs and lower lows, indicating sustained downward momentum and decreasing prices over time.
Drawdown
The peak-to-trough decline in the value of an investment.
DRIP - "Dividend Reinvestment Plan"
A program that automatically reinvests cash dividends into additional shares of the issuing company’s stock.