Plain-English definitions of the market and trading terms used across this site.
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American Depositary Receipt
A negotiable certificate representing a specified number of shares in a foreign company traded on a U.S. stock exchange. ADRs make it easier for U.S. investors to invest in foreign companies without directly buying shares on foreign exchanges.
ADR Ticker Symbol
The unique abbreviation assigned to an ADR for trading purposes, facilitating identification and trading on U.S. stock exchanges.
Conversion Fee
The fee charged by the depositary bank for converting foreign dividends into U.S. dollars and distributing them to ADR holders.
Conversion Ratio
The ratio used to determine how many shares of the foreign company's stock can be exchanged for a specific number of ADRs or vice versa.
Cross-Listing
The practice of a company listing its shares on multiple stock exchanges, allowing it to reach a broader investor base and improve liquidity. ADRs enable cross-listing for foreign companies on U.S. exchanges.
Currency Risk
The risk that changes in exchange rates between the foreign company's currency and the U.S. dollar may impact the value of ADRs for U.S. investors.
Custodian Bank
A financial institution in the home country of the foreign company that holds the actual shares of the company and interacts with the depositary bank to facilitate the creation and redemption of ADRs.
Deposit Agreement
A legal contract between the depositary bank, the custodian bank, and the ADR holders, outlining the rights and obligations of each party in the ADR program.
Depositary Bank
A financial institution responsible for issuing and administering ADRs, including facilitating dividend payments, handling shareholder communications, and managing other administrative aspects of the ADR program.
Dividend Distribution
The process by which dividends paid by the foreign company are converted into U.S. dollars and distributed to ADR holders by the depositary bank.
Home Country Regulatory Compliance
The adherence to regulatory requirements and standards in the foreign company's home country, ensuring transparency and compliance with local laws and regulations.
Level I ADR
The lowest level of ADR program, allowing non-U.S. companies to list their shares on the U.S. over-the-counter market without significant regulatory requirements. Level I ADRs are subject to minimal disclosure requirements.
Level II ADR
A type of ADR program that requires compliance with U.S. Securities and Exchange Commission (SEC) registration and reporting requirements. Level II ADRs are listed on a U.S. stock exchange and can be bought and sold like regular stocks.
Level III ADR
The highest level of ADR program, involving a public offering and registration with the SEC. Level III ADRs are listed on U.S. stock exchanges and can raise capital for the foreign company through the sale of new shares to U.S. investors.
Listing Requirements
The criteria set by stock exchanges for companies to qualify for listing, including financial performance, corporate governance, and regulatory compliance. ADRs must meet these requirements to be listed on U.S. stock exchanges.
Market Capitalization
The total value of a company's outstanding shares, calculated by multiplying the current share price by the total number of shares. ADRs contribute to the market capitalization of the foreign company in U.S. markets.
OTC Market
A decentralized market where ADRs, especially Level I ADRs, may be traded directly between buyers and sellers without being listed on a formal stock exchange.
Ratio
The number of shares represented by a single ADR. The ratio determines how many ADRs equal one share of the foreign company's stock.
Sponsored ADR
A type of ADR where the foreign company has an agreement with a U.S. depositary bank to issue and administer the ADR program on its behalf.
Sponsored Level
The level of involvement and compliance with regulatory requirements by the foreign company in the ADR program. Sponsored ADRs typically have higher levels of involvement and are subject to more rigorous reporting requirements.
Sponsored Level Requirements
The specific conditions and requirements imposed by U.S. regulatory authorities for foreign companies wishing to establish sponsored ADR programs, including compliance with reporting standards.
Tax Implications
The potential tax consequences for U.S. investors holding ADRs, including implications for capital gains, dividend income, and withholding taxes on foreign dividends. Investors should be aware of tax treaties between the U.S. and the home country of the foreign company.
Unsponsored ADR
A type of ADR initiated without the direct involvement or cooperation of the foreign company. Unsponsored ADRs are created by a depositary bank without the company's active participation.
Voting Rights
The extent to which ADR holders have the right to vote on certain matters related to the foreign company, such as elections of the board of directors. Voting rights may vary depending on the level of the ADR program.
Cardano (cryptocurrency)
A blockchain platform for the development of decentralized applications and smart contracts.
Average Day Range (e.g., ADR(30) – average range over 30 days)
The average price range a stock experiences within a specific period, often used to gauge volatility.
After Hours trades
Trades that occur after the regular market hours, typically between 4:00 PM and 8:00 PM Eastern Time.
Automatic Market Maker
A decentralized finance (DeFi) algorithmic trading protocol that provides liquidity to decentralized exchanges.
All Or None
An order that must be executed in its entirety, or not at all.
All-Time High (price)
The highest historical price reached by a financial asset.
All-Time Low (price)
The lowest historical price reached by a financial asset.
At The Money
An option where the strike price is equal to the current market price of the underlying asset.
Australian Dollar
The official currency of Australia.
AUD/USD currency pair
Refers to the currency pair involving the Australian Dollar and the U.S. Dollar.
Be back later
A quick way to inform others that you will be back later.
Breakout
A significant price movement above a certain level of resistance or below a level of support.
Buying Power Reduction
The amount of capital required to open and maintain a particular options position.
Be right back
A quick way to inform others that you will be right back.
Bitcoin (cryptocurrency)
The first and most well-known cryptocurrency, often referred to as digital gold.
Buy the dip
A strategy of purchasing an asset when its price experiences a temporary decline.
GBP/USD currency pair
Refers to the currency pair involving the British Pound and the U.S. Dollar.
Canadian Dollar
The official currency of Canada.
Carry Trade - strategy exploiting interest rate differentials
A trading strategy that involves borrowing in a currency with a low-interest rate and investing in a currency with a higher interest rate.
Chicago Board Options Exchange
The largest options exchange in the U.S., facilitating the trading of options contracts.
Covered Call
A strategy where an investor holds a long position in an asset and sells a call option on the same asset to generate income.
Swiss Franc
The official currency of Switzerland.
Centerpoint Securities
A brokerage firm providing trading services for equities and options.
Decentralized autonomous organization
An organization represented by rules encoded as a computer program that is transparent, controlled by the organization members, and not influenced by a central government.
DAS Trading Software
A trading platform/software used for day trading.
Due Diligence
Research and analysis conducted before making an investment decision.
Decentralized Finance
A financial system built on blockchain technology that aims to recreate and improve upon traditional financial systems.
Decentralized Exchange
A cryptocurrency exchange that operates without a central authority or intermediary.
Deep In The Money
An option with a strike price significantly favorable compared to the current market price of the underlying asset.
DayRanger - stocks with the highest average day range
Stocks with the highest average daily price range, indicating higher volatility.
Do Your Own Research
Encourages individuals to conduct their own thorough research before making investment decisions.
End of Day
The closing time of a trading session.
Earnings Report
The public release of a company's financial performance, including revenue and profit, usually on a quarterly or annual basis.
Ethereum (cryptocurrency)
A blockchain platform enabling the creation of decentralized applications and smart contracts.
Euro
The official currency of the Eurozone.
Fundamental Analysis
Analyzing a security's intrinsic value by examining related economic, financial, and other qualitative and quantitative factors.
Fear of missing out
The fear that others are making profitable investments and one might miss out on potential gains.
Fade the rip
A trading strategy that involves selling after a rapid price increase.
Fear, Uncertainty, Doubt
Negative information or rumors spread to create fear and uncertainty in the market.
For what it’s worth
Used to qualify or emphasize a statement, often when providing information.
Forex (foreign exchange)
The global marketplace for trading national currencies against one another.
For your information
Used to inform someone about a piece of information.
British Pound
The official currency of the United Kingdom.
Good luck
Wishing someone success or good fortune.
Green to Red (Stock was above prior day’s close but dropped below it)
Indicates a stock that was initially above the prior day’s close but has dropped below it.
Price or account has increased
Indicates an increase in price or account value.
Get The Fuck Out / Got The Fuck Out
A slang expression urging someone to leave or expressing that someone has left.
Have fun
Wishing someone an enjoyable experience.
High of Day (nHOD = new high of day)
The highest price reached by a security during a particular trading day.
Hold On for Dear Life
A term used in the cryptocurrency community to encourage holding onto assets despite market volatility.
Interactive Brokers
A popular brokerage firm providing online trading services.
Initial Coin Offering
A fundraising method for new cryptocurrency projects, similar to an initial public offering (IPO) in the stock market.
In case you missed it
Used to draw attention to something important that the reader may have missed.
I don’t know
Indicates uncertainty or lack of knowledge.
If I remember correctly
Indicates that the following statement is based on the speaker's memory and may not be entirely accurate.
In my (humble) opinion
Indicates a personal opinion on a matter.
In other words
Used to rephrase or clarify a statement.
In The Money
An option with intrinsic value, meaning the option's strike price is favorable compared to the current market price of the underlying asset.
Implied Volatility
A measure of the market's expectations for the future volatility of an underlying asset, derived from option prices.
Japanese Yen
The official currency of Japan.
NZD/USD currency pair
Refers to the currency pair involving the New Zealand Dollar and the U.S. Dollar.
Know your customer
A process used by financial institutions to verify the identity of their customers.
Level 2 stock quotes
Provides detailed market data, including the best bid and ask prices, for a particular security.
Lower Bollinger Band
The lower boundary in a Bollinger Bands chart, indicating potential oversold conditions.
Low Float
Refers to stocks issued with a low number of shares, leading to higher volatility.
Long In The Money
Holding a long position in an option that is in the money.
Low of Day
The lowest price reached by a security during a particular trading day.
Laughing out loud
An expression used to convey laughter or amusement.
USD/CAD currency pair
Refers to the currency pair involving the U.S. Dollar and the Canadian Dollar.
Long Out Of The Money
Holding a long position in an option that is out of the money.
Usually small-cap companies with fewer shares issued, leading to higher volatility
Stocks with a limited number of shares available for trading, often resulting in price volatility.
Market Center Price
The midpoint between the national best bid and national best offer for an option.
Market Maker
A financial institution or individual that facilitates the buying and selling of financial instruments.
Market on Close
An order to buy or sell a security at the closing price, typically entered near the close of the trading day.
Non-Fungible Token
A unique digital asset, often representing ownership of digital or physical items.
New Zealand Dollar
The official currency of New Zealand.
S&P 100 Index Options
Options based on the S&P 100 Index.
Open Interest
The total number of outstanding options contracts for a particular security.
Oh my God
An expression of surprise or shock.
Over Night
Refers to positions or trades held overnight.
Out Of The Money
An option with no intrinsic value, meaning the option's strike price is not favorable compared to the current market price of the underlying asset.
Peer to peer
A decentralized network where participants interact directly with each other without intermediaries.
Stock is starting to move up off consolidation
Indicates a stock showing signs of upward movement after a period of consolidation.
Power Hour (the last hour of trading)
The final hour of the trading day, often characterized by increased trading activity.
Percentage in Point (measure of price movement)
A standardized unit of movement in the foreign exchange market.
Portfolio Margin
A margin system that bases margin requirements on the overall risk of a portfolio of positions.
Probability of Profit
The likelihood that a trade will be profitable based on statistical analysis or option pricing models.
Proof of stake
A consensus algorithm used in blockchain networks, where validators are chosen to create new blocks based on the number of coins they hold and are willing to "stake."
Proof of work
A consensus algorithm used in blockchain networks, where validators (miners) solve complex mathematical problems to validate transactions and create new blocks.
Pre-market trades
Trades that occur before the regular market hours, typically between 4:00 AM and 9:30 AM Eastern Time.
Proper respect / Proper recognition
An informal expression conveying proper acknowledgment or respect.
Price is below the previous day’s close
Indicates that the current price is below the closing price of the previous trading day.
Resistance
A price level at which a security often faces selling pressure, preventing it from moving higher.
Red to Green (Stock was below prior day’s close but rose above it)
Indicates a stock that was initially below the prior day’s close but has risen above it.
Return on Capital
A measure of the return generated on invested capital.
Return on Investment
A measure of the profitability of an investment, calculated as the gain or loss relative to the initial investment.
Risk/Reward
The ratio of potential profit to potential loss in a trade.
Reverse Split
A corporate action that reduces the number of a company's outstanding shares, increasing the share price proportionally.
S&P 500 Index Options
Options based on the S&P 500 Index
Support/Resistance
Levels on a chart where the price of an asset might experience a pause in its movement or change direction.
Short Sell
The sale of a borrowed security with the expectation of buying it back later at a lower price.
Short Sell Restriction/Downtick Rule
A rule that prevents short selling on a downtick, designed to prevent excessive downward pressure on a stock's price.
Sell To Close
Closing out an existing options position by selling the contract.
Straddle
A strategy where an investor holds a position in both a call and a put option with the same strike price and expiration date.
Sell To Open
Opening a position by selling an options contract.
Stop
A conditional order to buy or sell an option at a specific price or better.
Strangle
A strategy where an investor holds a position in both a call and a put option with different strike prices but the same expiration date.
Support
A price level at which a security often faces buying interest, preventing it from moving lower.
Skewness Volatility
A measure of how the implied volatility of options varies with different strike prices.
Trade Date Plus One
The settlement date for securities transactions that occur on a trade date.
Trade Date Plus Two
The settlement date for most securities transactions, occurring two business days after the trade date.
Trade Date Plus Three
The settlement date for certain securities transactions, occurring three business days after the trade date.
Technical Analysis
The analysis of historical price and volume data to forecast future price movements.
Thanks in advance
Expressing gratitude for anticipated assistance or information.
Thinkorswim
A trading platform owned by TD Ameritrade.
Time To Maturity
The remaining time until an options contract expires.
Talk to you later
A casual way of saying goodbye with the intention of talking again in the future.
Thank you
Expressing gratitude or appreciation.
Upper Bollinger Band
The upper boundary in a Bollinger Bands chart, indicating potential overbought conditions.
United States Dollar
The official currency of the United States.
Volatility Index
The CBOE Volatility Index, which measures market expectations for future volatility.
Warrant In The Money
A warrant where the current market price is higher than the exercise (strike) price.
Warrant Out Of The Money
A warrant where the current market price is lower than the exercise (strike) price.
Write To Buy
A trading strategy involving writing options and using the premium received to buy other options.
Mini S&P 500 Index Options
Options based on the Mini S&P 500 Index.
Generic Stock Symbol
Used to represent an unknown or generic stock in examples or discussions.
USD/JPY currency pair
Refers to the currency pair involving the U.S. Dollar and the Japanese Yen.
USD/JPY currency pair
Refers to the currency pair involving the U.S. Dollar and the Japanese Yen.
You’re welcome
A polite response to someone expressing gratitude.