Glossary

37 stock market terms explained in plain English, without the jargon and without taking anything for granted.

The terms that show up in the analysis, explained without taking anything for granted. Each one answers three things: what it is, why it matters, and the mistake almost everyone makes with it.

A

Analyst consensus It is the summary of what the analysts covering a company recommend, grouped into categories like buy, hold or sell.

B

Bitcoin Bitcoin is a payment network and a digital asset that runs without any bank or company administering it.

C

Cash flow Cash flow is the money that actually came into and went out of a company over a period.

D

Diversification Diversifying means spreading your money across assets that do not all move the same way, so that one mistake or one isolated problem cannot wipe out your whole capital. Dividend A dividend is the share of its profits that a company pays out in cash to the people who own its stock. Dollar index (DXY) The dollar index (DXY) measures the strength of the US dollar against a basket of six currencies: the euro, the yen, the pound, the Canadian dollar, the Swedish krona and the Swiss franc. Dow Jones The Dow Jones Industrial Average is an index of just 30 large American companies, chosen by a committee.

E

EBITDA EBITDA is a company's earnings before subtracting interest, taxes, depreciation and amortization. EPS (earnings per share) EPS (earnings per share) is the company's net profit divided by the number of shares that exist. ETF An ETF is a fund that trades on an exchange as if it were a stock, but that holds dozens or hundreds of different assets inside. Extrinsic value Extrinsic value is the part of an option price that does not correspond to an existing gain, but to the possibility of one before expiry.

F

Fed funds rate The Fed funds rate is the interest range the Federal Reserve sets as the benchmark for very short-term lending between banks. Federal Reserve (Fed) The Federal Reserve, or Fed, is the central bank of the United States. Free cash flow Free cash flow is the money a company has left after paying its operating expenses and investing what it needs to maintain and grow its business.

I

Insider trading These are the stock purchases and sales made by the people inside a company: directors, senior executives and large shareholders. Intrinsic value Intrinsic value is the part of an option price that reflects gain it already holds: the difference between the price of the underlying and the strike price, when that difference is favourable.

K

KOSPI The KOSPI is the main stock index of South Korea: it groups together every company listed on the main market of the Seoul exchange, weighted by market value.

M

MACD The MACD (moving average convergence divergence) compares two averages of the price — a fast one and a slow one — to detect when a trend is gaining or losing strength. Magnificent 7 (Mag 7) The "Magnificent 7" are the seven big US technology companies that account for an enormous share of total market value: Apple, Microsoft, Alphabet, Amazon, NVIDIA, Meta and Tesla. Market cap Market capitalization is what the whole company is worth on the market: the price of one share multiplied by the total number of shares.

N

Nasdaq Nasdaq is two things at once: an American stock exchange where more than three thousand companies are listed, and a family of indices that track those companies.

P

P/E ratio (price-to-earnings) The P/E ratio (price-to-earnings) divides a stock's price by the earnings that stock generates in a year. Penny stocks Penny stocks are shares trading at a very low price, usually under five dollars, in small companies with little liquidity. Premarket and after-hours They are the trading sessions outside the exchange's normal hours: premarket happens before the open and after-hours after the close. Price target A price target is the level an analyst estimates a stock will reach over a twelve-month horizon.

Q

Quarterly earnings They are the report that publicly traded companies release every three months with their sales, their profits and their financial position.

R

RSI (relative strength index) The RSI (Relative Strength Index) is an indicator that compares the size of recent gains with the size of recent losses, on a scale of 0 to 100. Russell 2000 The Russell 2000 is an index tracking around two thousand small-capitalisation American companies, the ones that fall below the thousand largest in the country.

S

S&P 500 The S&P 500 is an index that tracks the price of the 500 largest listed companies in the United States, weighted by market value. Stablecoin A stablecoin is a digital coin designed to always hold the same value as something else, almost always the US dollar. Stock split A split is when a company divides each of its shares into several.

T

Ticker A ticker is the short code — usually one to five letters — that identifies a stock on an exchange. Trading volume Volume is the number of shares that changed hands over a period — usually a day.

U

USD/JPY (dollar-yen) USD/JPY is the exchange rate between the US dollar and the Japanese yen: how many yen it takes to buy one dollar.

V

VIX (volatility index) The VIX is an index that measures how much volatility the market expects for the S&P 500 over the next 30 days. Volatility Volatility measures how much the price of an asset swings over a period.

W

Williams %R Williams %R is a momentum oscillator that compares the current closing price with the range between the high and the low of a period.

Terms are still missing and will be added over time. If one of them tripped you up while reading an analysis, write to us and it goes on the list.