Financial Glossary

Key financial and trading terms explained with live market data examples.

B

Bull Market vs Bear Market

A bull market is a sustained rise of 20%+ from recent lows. A bear market is a decline of 20%+ from recent highs. Understanding market cycles is fundamental to investing.

Beta (Stock Volatility)

Beta measures a stock's volatility relative to the overall market. Beta > 1 = more volatile than the market; beta < 1 = less volatile.

Bollinger Bands

Bollinger Bands plot standard deviation bands around a 20-period SMA, expanding during volatility and contracting during calm — identifying potential breakout setups.

C

Convergence Signal

A convergence signal occurs when multiple independent market indicators simultaneously flag the same stock, suggesting high-conviction opportunity.

D

Dividend Yield

Dividend yield shows what percentage of a stock's price is paid out annually in dividends. It's calculated as annual dividend per share divided by stock price.

Dark Pool Trading

Dark pools are private exchanges where institutional investors trade large blocks of shares without showing their orders to the public market.

E

Earnings Per Share (EPS)

EPS represents a company's profit divided by shares outstanding. Beating or missing EPS estimates is the single biggest driver of post-earnings stock moves.

Exponential Moving Average (EMA)

The exponential moving average weights recent prices more heavily than older prices, making it more responsive to new information than the SMA.

G

Gamma Exposure (GEX)

Gamma exposure measures the net gamma that options dealers hold. It creates mechanical support and resistance as dealers hedge their positions.

H

Hedging

Hedging reduces portfolio risk by taking offsetting positions. The most common stock hedge is buying put options, which increase in value when the stock falls.

I

Implied Volatility (IV)

Implied volatility measures the market's expectation of future price movement. Higher IV = more expensive options.

L

Limit Order

A limit order specifies the maximum price you're willing to pay (buy) or minimum you'll accept (sell). It guarantees price but not execution.

M

MACD (Moving Average Convergence Divergence)

MACD tracks the relationship between two moving averages to identify trend direction, momentum, and potential buy/sell signals.

Market Capitalization

Market capitalization is a company's total value calculated by multiplying share price by shares outstanding.

Max Pain

Max pain is the strike price where the most options (calls + puts) would expire worthless, causing maximum loss to option holders.

O

Options Flow

Options flow tracks large institutional options orders to reveal where smart money is positioned before it shows up in stock prices.

P

P/E Ratio (Price-to-Earnings)

The P/E ratio divides a stock's price by its earnings per share. It measures how much investors pay per dollar of earnings — the most common valuation metric.

Put/Call Ratio (PCR)

The put/call ratio compares put volume to call volume. High PCR = bearish sentiment, low PCR = bullish sentiment.

R

RSI (Relative Strength Index)

RSI measures price momentum on a 0-100 scale. Above 70 = overbought, below 30 = oversold.

S

Stop Loss Order

A stop loss is an order that automatically sells a position when the price drops to a specified level, limiting potential losses on a trade.

Support and Resistance

Support is a price level where buying pressure prevents further decline; resistance is where selling pressure prevents further advance.

Simple Moving Average (SMA)

A simple moving average calculates the average closing price over a set period, smoothing out noise to reveal the underlying trend.

Short Interest

Short interest measures how many shares of a stock have been sold short. High short interest indicates bearish sentiment and potential squeeze risk.

T

Trading Volume

Trading volume measures how many shares or contracts change hands. It confirms trends, validates breakouts, and reveals institutional activity.

V

Volatility

Volatility measures the magnitude of price fluctuations. Historical volatility looks at past moves; implied volatility prices in expected future moves.