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124 terms
4
401(k)
Employer-sponsored retirement account. Contributions are pre-tax (reducing your taxable income now), and investments grow tax-deferred until withdrawal in retirement. Many employers match contributions — that is free money.
Personal
A
ATR
Average True Range — measures price volatility by averaging the range of each period. Higher ATR = more volatile stock.
Indicators
Analyst Rating
Consensus recommendation from Wall Street analysts: Strong Buy → Buy → Hold → Sell → Strong Sell. Most analysts cluster around 'Buy' — a 'Hold' is often their polite way of saying 'avoid.'
Fundamental
Anchored VWAP
VWAP calculated from a specific starting point chosen by the trader (e.g., a major low, earnings date, or breakout date) rather than the daily open. Shows the average price paid by all participants since that key event.
Technical
Alpha
The excess return a portfolio or strategy generates above a benchmark index (like the S&P 500) after adjusting for market risk. Positive alpha means the manager added value beyond what the market gave; negative alpha means they underperformed.
Risk
ATR
Average True Range — a volatility indicator measuring the average range of price movement over a set period (typically 14 bars). Used to set rational stop-loss distances and position sizes. ATR expands in volatile markets and contracts in calm ones.
Indicators
B
Bull Market
A market where prices are rising or expected to rise. Named after a bull thrusting its horns upward.
Basics
Bear Market
A market where prices are falling or expected to fall (typically 20%+ decline). Named after a bear swiping its paws downward.
Basics
Bid/Ask
Bid is the highest price a buyer will pay; Ask is the lowest price a seller will accept. The difference is the spread.
Basics
Bollinger Bands
Three lines around price: a middle SMA and upper/lower bands at 2 standard deviations. Price touching the bands may signal reversals.
Indicators
Beta
Measures a stock's volatility relative to the overall market. Beta > 1 = more volatile than the market, Beta < 1 = less volatile.
Fundamental
Bull Case
The optimistic scenario for a stock — what needs to go right for the stock to hit the analyst's high price target. Usually assumes best-case revenue growth, margin expansion, and multiple expansion.
Fundamental
Bear Case
The pessimistic scenario — what risks or negative events could send the stock to its low price target. Important for risk management: always know the bear case before buying.
Fundamental
Budget
A plan for how you allocate your income across needs, wants, savings, and investments. The 50/30/20 rule is a popular framework: 50% needs, 30% wants, 20% savings.
Personal
Bridge
A protocol that transfers tokens between different blockchains — for example, moving ETH from Ethereum mainnet to Arbitrum. Bridges lock assets on the source chain and mint wrapped equivalents on the destination chain.
Crypto
Black Swan
A term coined by Nassim Taleb for high-impact, nearly unpredictable events that are rationalized in hindsight as 'obvious.' Financial black swans: the 2008 financial crisis, COVID market crash, dot-com collapse. Risk managers try to ensure portfolios survive them.
Risk
Basis Risk
The risk that a hedge doesn't perfectly offset the underlying exposure because the hedge instrument moves differently than expected. Arises when the hedging asset and the position being hedged aren't perfectly correlated.
Risk
Beta
A measure of a stock or portfolio's sensitivity to overall market movements. Beta of 1.0 means the asset moves in line with the market. Above 1.0 = amplified market moves (more volatile). Below 1.0 = dampened moves (less volatile). Negative beta = moves opposite to the market.
Fundamental
C
Candlestick
A chart element showing OHLC prices. The body shows open-to-close range; wicks show high and low. Green = close > open (price went up), Red = close < open (price went down).
Basics
Commission
A fee charged by the broker for executing a trade. In this simulator, it's $0.01 per share (min $1).
Orders
Current Ratio
Current assets divided by current liabilities. Measures ability to pay short-term obligations. Above 1.5 is healthy; below 1.0 signals potential liquidity risk.
Fundamental
Compound Interest
Interest earned on both the original principal and previously accumulated interest. Over long periods, compounding creates exponential growth — the 'eighth wonder of the world.'
Personal
Credit Score
A number (300-850) that represents your creditworthiness. Based on payment history (35%), utilization (30%), history length (15%), credit mix (10%), and new credit (10%). Affects loan rates, approvals, and sometimes job offers.
Personal
CEX
Centralized Exchange — a traditional crypto exchange run by a company that holds custody of user funds (like a bank). Examples: Coinbase, Binance, Kraken. Easier to use but carries counterparty risk.
Crypto
Cold Wallet
A hardware device or offline method for storing cryptocurrency private keys completely disconnected from the internet. Maximum security for long-term holdings. Examples: Ledger, Trezor. Contrast with hot wallets (online).
Crypto
Correlation Breakdown
When assets that historically moved independently suddenly move together during a crisis, eliminating diversification benefits precisely when you need them most. In a panic, 'all correlations go to 1.'
Risk
D
Diversification
Spreading investments across different stocks and sectors to reduce risk. If one stock drops, others may hold steady or rise.
Risk
Drawdown
The decline from a portfolio's peak value to its lowest point. A 10% drawdown means you lost 10% from your highest balance.
Risk
Day Trading
Buying and selling stocks within the same trading day. Aims to profit from small intraday price movements.
Risk
Dividend
A payment made by a company to its shareholders from its profits, usually quarterly. Dividend yield shows the annual return from dividends alone.
Fundamental
Debt-to-Equity
Total debt divided by shareholders' equity. Measures financial leverage. High D/E means the company relies heavily on borrowed money — riskier in downturns but can amplify returns in good times.
Fundamental
Dividend Payout Ratio
Percentage of earnings paid as dividends. High payout (>80%) leaves little for reinvestment; low payout (<30%) signals reinvestment focus. A payout over 100% means dividends exceed earnings — unsustainable.
Fundamental
Dollar-Cost Averaging
Investing a fixed dollar amount at regular intervals regardless of market conditions. Reduces the impact of volatility by buying more shares when prices are low and fewer when high.
Personal
DEX
Decentralized Exchange — a peer-to-peer trading platform that lets users swap tokens directly from their wallets using smart contracts and liquidity pools. No company holds your funds. Examples: Uniswap, Curve.
Crypto
Delta Neutral
A portfolio or position with a total delta of approximately zero — meaning small price moves in the underlying asset have minimal impact on total P&L. Used by traders who want to profit from volatility or time decay while hedging directional risk.
Options
E
EMA
Exponential Moving Average — like SMA but gives more weight to recent prices, making it react faster to price changes.
Indicators
EPS
Earnings Per Share — company's net profit divided by outstanding shares. Higher EPS means the company is more profitable.
Fundamental
EV/EBITDA
Enterprise Value divided by Earnings Before Interest, Taxes, Depreciation, and Amortization. Compares companies across different capital structures (debt levels). Often called the 'takeover multiple.'
Fundamental
Earnings Surprise
The difference between actual reported EPS and Wall Street analyst consensus estimate. Positive surprise (beat) often causes gap-ups; negative surprise (miss) causes gap-downs.
Fundamental
Earnings Catalyst
A scheduled event that could significantly move a stock price: quarterly earnings report, product launch, FDA drug approval decision, analyst day, or major contract announcement.
Fundamental
EPS Growth
Increase in earnings per share compared to the same period in the prior year. Drives stock valuations long-term — ultimately stock prices follow EPS trends. Negative EPS growth is a significant red flag.
Fundamental
Emergency Fund
3-6 months of living expenses held in a liquid, safe account (like a high-yield savings account). Protects you from selling investments at a loss when unexpected expenses arise.
Personal
Expense Ratio
The annual fee charged by a fund, expressed as a percentage of assets. A 0.03% expense ratio on $10,000 costs $3/year. Low-cost index funds typically charge 0.03-0.20%, while actively managed funds charge 0.50-1.50%.
Personal
F
Forward P/E
Valuation using the next 12 months' estimated earnings instead of past earnings. A lower Forward P/E than trailing P/E means analysts expect earnings to grow — the company is getting cheaper relative to future profits.
Fundamental
Free Cash Flow
Cash generated from operations minus capital expenditures. Unlike earnings, FCF is hard to manipulate with accounting. Companies with strong FCF can fund growth, pay dividends, or buy back shares.
Fundamental
Float
The total number of shares available for public trading, excluding locked-up shares held by insiders, institutions with restrictions, or the company itself. Smaller float = more volatile price moves.
Fundamental
Fat Tails
The statistical phenomenon where extreme outcomes (large gains or losses) occur more frequently than a normal distribution predicts. Financial returns have fatter tails than bell curves — catastrophic crashes are more common than models suggest.
Risk
G
Gross Margin
Revenue minus cost of goods sold, expressed as a percentage of revenue. High gross margin (>50%) signals pricing power — the company can charge more than it costs to produce. Margin compression is a red flag.
Fundamental
Gas Fees
The transaction costs paid to network validators to process operations on a blockchain. Fees spike during high network congestion and fall during quiet periods. Paid in the chain's native token (ETH on Ethereum).
Crypto
Gamma Squeeze
A rapid price surge caused by market makers buying shares to hedge the gamma exposure of options they sold. As a stock rises, market makers must buy more shares to stay delta-neutral, which drives the price even higher in a feedback loop.
Options
I
Insider Ownership
Percentage of outstanding shares owned by company executives, directors, and major shareholders. High insider ownership (>10%) aligns management incentives with shareholders — they win only when you win.
Fundamental
Index Fund
A mutual fund or ETF that tracks a market index (like the S&P 500). Provides instant diversification across hundreds of stocks with very low fees. Warren Buffett recommends them for most investors.
Personal
Inflation
The rate at which prices increase over time, reducing your purchasing power. Historically averages ~3% per year. Cash in a 0.5% savings account loses real value — investing is the primary defense.
Personal
Ichimoku Cloud
A comprehensive Japanese trend indicator that shows support/resistance, momentum, and trend direction simultaneously. Five components: Tenkan-sen (fast average), Kijun-sen (base line), Senkou Span A and B (forming the 'cloud' or Kumo), and Chikou Span (lagging line). Price above the cloud = bullish; below = bearish.
Indicators
L
Long
Buying a stock expecting its price to go up. You profit when you sell at a higher price than you bought.
Basics
Liquidity
How easily you can buy or sell a stock without affecting its price. High-volume stocks like AAPL are very liquid.
Basics
Limit Order
An order to buy or sell at a specific price or better. It only executes when the market reaches your price.
Orders
Layer 2
A secondary network built on top of a blockchain (Layer 1) to process transactions faster and cheaper, then settle batches back to the main chain. Examples include Arbitrum and Optimism on Ethereum.
Crypto
LEAPS
Long-Term Equity Anticipation Securities — options contracts with expiration dates more than one year away. Used as a low-cost substitute for stock ownership, providing leveraged exposure with capped downside.
Options
Liquidity Risk
The risk of being unable to sell a position quickly at a fair price. In a crisis, bid/ask spreads widen dramatically and buyers disappear. Illiquid positions can cause forced selling at catastrophic prices.
Risk
M
Market Order
An order to buy or sell immediately at the current market price. Fast execution but you may get a slightly different price than expected.
Orders
MACD
Moving Average Convergence Divergence — shows the relationship between two EMAs. When the MACD line crosses above the signal line, it's a bullish signal.
Indicators
Market Cap
Market Capitalization — the total value of all a company's shares. Calculated as share price x total shares outstanding.
Fundamental
M2 Money Supply
A broad measure of money in circulation: cash, checking deposits, savings accounts, money market funds, and small CDs. Rapid M2 expansion often precedes inflation. The Fed monitors M2 to calibrate monetary policy.
Macro
Market Profile
A charting method that displays price distribution over time as a bell curve rotated 90 degrees. Shows where the most trading occurred (Point of Control), and the Value Area — the price range containing 70% of volume.
Technical
Maximum Drawdown
The largest peak-to-trough decline a portfolio experiences over a given period, expressed as a percentage. Represents the worst-case loss an investor would have suffered if they bought at the peak and sold at the bottom. Critical for assessing real-world risk tolerance.
Risk
Market Profile
A charting method developed by J. Peter Steidlmayer that displays price distribution as a rotated bell curve. Shows where the most trading activity occurred (Point of Control / POC) and defines the Value Area — the 70% of volume zone. Prices gravitate toward the POC and reject from Value Area High/Low extremes.
Technical
N
Net Margin
Net income divided by revenue. The true bottom line — what percentage of every sales dollar becomes profit after all expenses, interest, and taxes. Hard to manipulate like operating metrics.
Fundamental
Net Worth
Total assets (cash, investments, property) minus total liabilities (debts, loans). The single most important number for measuring financial health. Track it monthly.
Personal
NFT
Non-Fungible Token — a unique digital asset on the blockchain representing ownership of a specific item (art, collectible, in-game item). Unlike fungible tokens (1 BTC = 1 BTC), each NFT is one-of-a-kind and cannot be replicated.
Crypto
O
OHLC
Open, High, Low, Close — the four key prices for each trading period. Open is the first trade, High/Low are the extremes, Close is the last trade.
Basics
Operating Margin
Operating income divided by revenue. Shows how efficiently the company runs its core business after paying operating expenses (salaries, rent, R&D) but before interest and taxes.
Fundamental
Order Flow
The real-time stream of buy and sell orders entering the market, showing how much aggressive buying versus selling is occurring at each price level. Positive order flow (buyers initiating) drives prices up; negative flow (sellers initiating) drives prices down. Analyzed via DOM (Depth of Market) and footprint charts.
Technical
P
Portfolio
The collection of all your investments. It includes stocks, cash, and any other assets you hold.
Basics
Position Sizing
Deciding how many shares to buy based on your risk tolerance. A common rule is to never risk more than 1-2% of your portfolio on a single trade.
Risk
P/E Ratio
Price-to-Earnings Ratio — stock price divided by earnings per share. Shows how much investors pay per dollar of earnings. Lower P/E may indicate a cheaper stock.
Fundamental
Price Target
An analyst's 12-month price forecast for a stock. The consensus price target is the average across all covering analysts. Upside to PT = (PT − current price) / current price × 100%.
Fundamental
P/B Ratio
Price-to-Book Ratio: share price divided by book value per share (assets minus liabilities). Value investors traditionally look for P/B below 1 (trading below asset value). Less useful for asset-light tech firms.
Fundamental
P/S Ratio
Price-to-Sales Ratio: market cap divided by annual revenue. Useful for growth companies without earnings yet. High P/S requires strong revenue growth to justify the premium.
Fundamental
PEG Ratio
P/E Ratio divided by the annual earnings growth rate. Peter Lynch popularized this: PEG below 1.0 may indicate undervalued relative to growth; above 2.0 may be expensive even if growth is fast.
Fundamental
Pin Risk
The uncertainty for options traders when a stock closes exactly at or very near a strike price on expiration day. Sellers don't know whether the option will be exercised, creating overnight risk from an unexpected stock position.
Options
Point of Control
The single price level with the highest traded volume in a Volume Profile or Market Profile. Acts as a strong magnet for price — gaps away from the POC often close as price mean-reverts back to where most volume occurred.
Technical
R
RSI
Relative Strength Index — measures momentum on a 0-100 scale. Above 70 = overbought (may drop), below 30 = oversold (may rise).
Indicators
Resistance
A price level where selling pressure prevents the price from rising further. Think of it as a ceiling.
Indicators
Risk/Reward Ratio
Compares potential loss to potential gain. A 1:3 ratio means you risk $1 to potentially gain $3. Look for trades with at least 1:2.
Risk
ROI
Return on Investment — the percentage gain or loss on your investment. Calculated as (profit / cost) x 100.
Risk
ROE
Return on Equity — net income divided by shareholders' equity. Measures how effectively management converts invested capital into profit. Above 15% is considered strong; above 30% is exceptional.
Fundamental
Revenue Growth YoY
Year-over-year revenue increase expressed as a percentage. One of the most important growth metrics — consistently high revenue growth (>20%) usually justifies premium valuations.
Fundamental
Roth IRA
Individual retirement account funded with after-tax dollars. All growth and qualified withdrawals are completely tax-free. Best for young investors who expect to be in higher tax brackets later.
Personal
Rule of 72
Quick mental math to estimate how many years to double your money: divide 72 by the annual return rate. At 8% returns: 72/8 = 9 years to double.
Personal
Repo Market
The overnight lending market where banks and financial institutions borrow cash short-term using securities as collateral (repurchase agreements). Stress in repo markets can signal broader financial system liquidity problems.
Macro
S
Stock
A share of ownership in a company. When you buy a stock, you own a small piece of that company.
Basics
Short
Selling a stock you don't own, expecting the price to drop. You borrow shares, sell them, then buy them back cheaper to profit.
Basics
Spread
The difference between the bid and ask price. Tighter spreads mean more liquid markets with lower trading costs.
Basics
Stop-Loss
An order that automatically sells your position when the price drops to a set level, limiting your losses.
Orders
Slippage
The difference between the expected price and the actual execution price. Happens because prices move between when you place and execute an order.
Orders
SMA
Simple Moving Average — the average closing price over N periods. Smooths out price data to show the trend direction.
Indicators
Stochastic
Stochastic Oscillator — compares closing price to the price range over N periods (0-100). Above 80 = overbought, below 20 = oversold.
Indicators
Support
A price level where buying pressure is strong enough to prevent the price from falling further. Think of it as a floor.
Indicators
Swing Trading
Holding stocks for days to weeks to capture medium-term price moves. Less hectic than day trading.
Risk
Short Float
The percentage of a company's tradeable shares currently sold short by bearish traders. High short float (>15%) can trigger violent short squeezes if positive news forces covering.
Fundamental
Short Squeeze
When a heavily-shorted stock rises rapidly, forcing short-sellers to buy shares to close positions, which pushes the price even higher in a self-reinforcing feedback loop.
Fundamental
Sector Rotation
The movement of investment capital from one industry sector to another as economic conditions change. Early cycle: Financials, Consumer Discretionary. Late cycle: Energy, Materials. Recession: Utilities, Healthcare.
Fundamental
Smart Contract
Self-executing code stored on a blockchain that automatically enforces the terms of an agreement when predetermined conditions are met — no intermediary needed. The foundation of DeFi, NFTs, and DAOs.
Crypto
Stablecoin
A cryptocurrency pegged to a stable asset (usually the US dollar) to minimize price volatility. Types: fiat-backed (USDC), crypto-backed (DAI), or algorithmic. Used as a safe haven during crypto market downturns.
Crypto
Stagflation
A toxic economic combination of stagnant growth (or recession), high inflation, and high unemployment simultaneously. Stagflation is the central bank's nightmare — raising rates fights inflation but worsens unemployment.
Macro
Synthetic Position
A combination of options (and sometimes stock) that replicates the payoff of another instrument. A synthetic long = long call + short put at the same strike. Allows traders to gain exposure without direct ownership.
Options
Sharpe Ratio
The most widely used risk-adjusted return metric. Measures how much excess return you earn per unit of total risk (standard deviation). A higher Sharpe means better risk-adjusted performance. Above 1.0 is good; above 2.0 is excellent; above 3.0 is rare and exceptional.
Risk
Sortino Ratio
A variant of the Sharpe Ratio that only penalizes downside volatility — upside volatility is not considered 'risk.' More appropriate for strategies with positive return skew where large upside is desirable. A Sortino above 2.0 is considered strong.
Risk
T
Take-Profit
An order that automatically sells your position when the price rises to a set level, locking in your gains.
Orders
Tokenomics
The economic model governing a cryptocurrency: total supply, emission schedule, distribution (team, investors, public), utility, and burn mechanisms. Good tokenomics align long-term incentives for all participants.
Crypto
Theta Gang
A community of options traders who primarily sell options (covered calls, cash-secured puts, iron condors) to systematically collect theta (time decay) premium. Their edge: options expire worthless about 70% of the time.
Options
Tail Risk
The probability of rare, extreme market events (beyond 3 standard deviations from the mean) that traditional models underestimate. Tail events cause outsized losses and occur far more frequently than bell-curve models predict.
Risk
U
Unrealized P&L
Profit or loss on positions you still hold. It only becomes 'realized' when you close the position by selling.
Risk
V
Volume
The number of shares traded during a given time period. High volume means lots of buying and selling activity.
Basics
Volatility
How much a stock's price fluctuates. High volatility means big price swings (higher risk and potential reward).
Basics
VWAP
Volume Weighted Average Price — the average price weighted by volume. Institutional traders use it as a benchmark for fair value.
Indicators
Valuation Premium
When a stock trades at a higher P/E or other multiple than its peers, justified by superior growth, competitive moat, management quality, or recurring revenue quality.
Fundamental
Velocity of Money
How frequently each dollar changes hands in the economy over a given period. High velocity = a dollar is spent quickly, stimulating growth. Low velocity = money sits idle in savings, reducing economic activity.
Macro
Vol Crush
The rapid collapse in implied volatility (IV) immediately after a highly anticipated event like earnings, FDA approval, or Fed announcement. Options buyers lose money even if they correctly predicted the direction, because IV collapses faster than the move gains.
Options
Volume Profile
A histogram displayed on the price axis showing how much volume traded at each price level over a selected period. Identifies high-volume nodes (strong support/resistance) and low-volume nodes (price moves quickly through these).
Technical
Value Area
The price range in a Volume or Market Profile where approximately 70% of the day's volume was traded. The Value Area High (VAH) and Value Area Low (VAL) act as key support and resistance levels for the following session.
Technical
VWAP
Volume-Weighted Average Price — the average price of a security weighted by volume traded at each price level throughout the session. Institutional traders benchmark their execution quality against VWAP. Buying below VWAP is considered a 'good fill'; above VWAP is unfavorable for buys.
Indicators
Y
Yield Curve Inversion
When short-term Treasury yields rise above long-term yields (e.g., 2-year rate > 10-year rate) — the opposite of the normal relationship. Has preceded every US recession in the last 50 years, typically by 12–18 months.
Macro
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