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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 - "M"
MA - "Moving Average"
A statistical calculation used in technical analysis to smooth out price data over a specific period, helping to identify trends by filtering out noise from random price fluctuations.
MACD - "Moving Average Convergence Divergence"
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.
Margin
Borrowed funds provided by a broker to increase the buying power of a trader’s account, allowing them to take larger positions than they could with their own capital alone. Margin can amplify both gains and losses, and it requires maintaining a minimum account balance known as the margin requirement.
Margin Call
A broker's demand for a trader to deposit additional funds or securities into their margin account to meet the minimum margin requirement, triggered when the account's equity falls below the required level due to trading losses. Failure to meet a margin call can result in the broker liquidating positions to restore the required balance.
Margin Requirement
The minimum amount of equity that a trader must maintain in their account when using margin, expressed as a percentage of the total trade value. It ensures traders have sufficient funds to cover potential losses and varies by broker, asset type, and market conditions.
Market Cap - "Market Capitalization"
The total market value of a company's outstanding shares of stock, calculated by multiplying the share price by the total number of shares.
Market Correction
A decline of 10% or more in the price of a financial asset or index from its recent peak, often seen as a natural pullback in an overall upward trend.
Market Depth
A measure of the supply and demand for a security, displayed as the number of buy and sell orders at different price levels, indicating the market's ability to absorb large orders without significantly affecting the price.
Market Order
An order to buy or sell a security immediately at the current market price, guaranteeing execution but not the exact price.
MER - "Management Expense Ratio"
A measure of the total costs associated with managing an investment fund, expressed as a percentage of the fund's average net assets.
Mid Cap
Refers to companies with a market capitalization typically between $2 billion and $10 billion, often considered to have a balance of growth potential and stability.
MM - "Market Maker"
A firm or individual that actively quotes two-sided markets in a financial instrument, providing liquidity by being ready to buy and sell at publicly quoted prices.
MOC - "Market on Close"
An order that is executed at the market price at the end of the trading day, typically used to buy or sell securities just before the market closes.
MOM - "Month-Over-Month"
A financial comparison that measures the performance of a metric over a one-month period, often used to evaluate short-term trends or changes in sales, expenses, or other financial indicators.
Money Market Account
A type of savings account that typically offers higher interest rates and limited check-writing capabilities, while requiring a higher minimum balance than standard savings accounts.
MOO - "Market on Open"
An order to buy or sell a security at the market price at the beginning of the trading session, executed as soon as the market opens.
Mortgage
A loan specifically used to purchase real estate, where the property serves as collateral for the loan, typically requiring regular payments of principal and interest over a set period.
Mutual Fund
An investment vehicle that pools money from multiple investors to purchase a diversified portfolio of stocks, bonds, or other securities, managed by professional portfolio managers.
Divider Placeholder
glossary - "N"
NASDAQ
The National Association of Securities Dealers Automated Quotations, a global electronic marketplace for buying and selling securities, known for its high concentration of technology and growth-oriented companies.
Nasdaq 100
A stock market index that tracks the performance of 100 of the largest non-financial companies listed on the Nasdaq Stock Exchange, often representing sectors like technology, healthcare, and consumer services.
Net Income
The total profit of a company after all expenses, taxes, and costs have been deducted from total revenue, often referred to as the "bottom line" or net profit.
Net Worth
The total value of an individual’s or entity's assets minus its liabilities, representing financial health. It is calculated using the formula: Net Worth=Total Assets−Total Liabilities; It indicates the owner's equity in assets after all debts are paid.
NSF - "Non-Sufficient Funds"
A term used when a bank account does not have enough money to cover a transaction, often resulting in a bounced check or declined payment.
NYSE - "New York Stock Exchange"
The largest stock exchange in the world by market capitalization, located in New York City, where shares of publicly traded companies are bought and sold.
Divider Placeholder
glossary - "O"
OCO Order - "Once Cancels the Other"
A type of order that allows a trader to place two orders simultaneously, where the execution of one order cancels the other, often used to set profit targets and stop-loss levels.
Open Interest
The total number of outstanding derivative contracts, such as options or futures, that have not been settled or closed, indicating market activity and liquidity.
Options Chain
A listing of all available options contracts for a particular security, displaying various strike prices, expiration dates, and details such as bid and ask prices, volume, and open interest.
ORB - "Opening Range Breakout"
A trading strategy that identifies potential buy or sell opportunities based on price movement breaking above or below the high or low of the opening range, typically during the first minutes of the trading session.
Order Book
A real-time list of buy and sell orders for a specific security, organized by price level, showing the current demand and supply in the market. Often referred to as Level 2 (L2) data.
OTC - "Over-the-Counter"
Off-exchange trading. A decentralized market where financial instruments, such as stocks, bonds, and derivatives, are traded directly between parties rather than through a formal exchange, often with less regulation and transparency.
Out-of-the-Money (OTM) Option
An option that has no intrinsic value; for a call option, the current price of the underlying asset is below the strike price, and for a put option, it is above the strike price.
Outside Day
A candlestick pattern where the entire price range of a trading day (the high and low) is outside the range of the previous day, indicating potential reversal or continuation of the current trend.
Overdraft
A financial situation where a bank account balance goes below zero, allowing the account holder to withdraw more money than is available, often incurring fees or interest charges.
Overhead
The ongoing business expenses that are not directly attributed to creating a product or service, such as rent, utilities, salaries of non-production staff, and other administrative costs, essential for the overall operation of a business.
Divider Placeholder
glossary - "P"
P/E - "Price-to-Earnings Ratio"
A valuation metric calculated by dividing the current share price of a company by its earnings per share (EPS), used to assess the relative value of a company's stock.
PA - "Price Action"
The movement of a security's price over time, used in technical analysis to make trading decisions based on historical price patterns and trends rather than indicators.
Passive Income
Earnings generated with minimal active involvement, often from investments like dividends, rental properties, or royalties, providing a steady cash flow over time.
Payout Ratio
The percentage of a company's earnings that is distributed to shareholders as dividends, calculated by dividing the total dividends paid by the net income.
PDC - "Previous Day Close"
The last trading price of a security at the end of the previous trading day, used as a reference point for current market analysis.
Penny Stock
A low-priced stock, typically trading for less than $5 per share, often characterized by high volatility and low market capitalization, making them riskier investments.
Pinbar Candle
A candlestick pattern characterized by a long wick and a small body, indicating a potential reversal or rejection of a price level, with the wick representing a sharp rejection of higher or lower prices.
PMI - "Purchasing Managers’ Index"
An economic indicator that measures the health of the manufacturing and service sectors based on surveys of purchasing managers, indicating overall economic activity and business conditions.
POC - "Point of Control"
The price level at which the highest volume of trading occurred during a specific time period, indicating a significant level of support or resistance in market analysis.
Portfolio
A collection of financial assets held by an individual or institution, such as stocks, bonds, cash, real estate, or other investments, aimed at achieving specific financial goals and managing risk through diversification.
Position Sizing
The process of determining the amount of capital to allocate to a particular trade or investment, based on the trader's risk tolerance and the specifics of the trade, to manage overall portfolio risk effectively.
Preferred Stock
A type of stock that typically offers fixed dividends and has priority over common stock in terms of dividend payments and asset liquidation in the event of company bankruptcy. However, it usually does not provide voting rights to shareholders.
Primary Market
The financial market where new securities are issued and sold directly to investors by the issuer, such as during an Initial Public Offering (IPO).
PT - "Profit Target"
A predetermined price level at which a trader plans to close a position to realize gains, often set based on technical analysis or percentage returns.
Pullback
A temporary reversal or pause in the direction of an asset's price trend, usually within an overall uptrend, offering potential entry opportunities before the trend resumes.
Put Option
A financial contract that gives the holder the right, but not the obligation, to sell an underlying asset at a specified price within a designated time frame.