This trading glossary collects the terms that come up again and again across KyvoInvest, from ask and bid to yield. Entries are written for someone meeting the word for the first time, and many link to a full guide where the idea gets room to breathe. Jump to a letter below, or read straight through; it takes less time than you might think.
How to use this trading glossary
Definitions describe how a term is generally used in English-language financial writing. Where the meaning depends on the country, the product or the platform, we say so. Numbers in the entries are illustrative. If you meet a word in stock market news that is not listed here, tell us through the contact page and we will consider adding it.
Five terms to learn first
If you are only going to read five entries today, make them these. Index and index fund explain what most headlines are measuring and what most new investors end up owning. Expense ratio is the cost that follows you for as long as you hold a fund. Spread is the cost you pay every time you buy and sell, whether or not a commission appears. And dividend is the part of a company's profit that reaches shareholders as cash, which is a large part of long-run returns from shares.
With those five in place, most of a fund factsheet or a market report becomes readable. The rest of this list fills in the detail: order types, valuation ratios, the vocabulary of leveraged trading and the basic words of crypto.
Words that are easy to mix up
- Dividend and dividend yield. The first is an amount of money per share; the second is that amount as a percentage of the share price, so it changes whenever the price moves.
- Margin and margin call. Margin is the deposit behind a leveraged position. A margin call, or close-out, is what happens when losses eat into that deposit too far.
- Market capitalisation and float-adjusted market capitalisation. The first counts every share; the second counts only those available to public investors, and it is the version most index providers use for weighting.
- Price index and total return index. A price index ignores dividends; a total return index assumes they are reinvested. Over decades, the difference is large.
- Stop-loss and limit order. A limit order fixes the worst price you will accept but may never be filled; a stop-loss aims to get you out once a level is reached but may be filled at a worse price.
The full list, A to Z
- Ask
- The lowest price at which someone is currently willing to sell. When you buy with a market order you normally pay the ask. It is also called the offer, and it always sits above the bid; the gap between the two is the spread. Quotes on screen show the ask for a standard quantity; a large order may have to pay progressively higher prices.
- Basis point
- One hundredth of a percentage point, or 0.01%. Interest rates, bond yields and fund charges are often discussed in basis points, so a rise from 4.00% to 4.25% is a move of 25 basis points. Using basis points avoids confusion between a change of one percentage point and a change of one per cent.
- Bear market
- A market convention for a fall of 20% or more from a recent high in a broad index. The term says nothing about how long the decline will last; some bear markets end in months, others take years.
- Bid
- The highest price a buyer is currently willing to pay. If you sell with a market order you usually receive the bid, which is always below the ask. In busy markets the bid and ask update many times a second.
- Blockchain
- A shared, append-only record of transactions kept by many computers at once, used by cryptocurrencies such as Bitcoin. See our crypto guide.
- Bond yield
- The annual return a bond offers new buyers at its current price. When bond prices fall, yields rise, and the reverse. Changes in government bond yields often move share prices because they alter what investors can earn elsewhere. The 10-year US Treasury yield is the one most often quoted in market coverage.
- Bull market
- A sustained period of rising prices in a market. Unlike bear market, there is no single agreed threshold; it is usually judged by hindsight.
- Capital gain
- The profit made when an asset is sold for more than it cost. Many countries tax capital gains, often with an annual allowance or special accounts that shelter them. A loss made on a sale may, in some tax systems, be set against gains.
- Correction
- Market convention for a fall of at least 10%, but less than 20%, from a recent peak in an index or share. Corrections are a normal part of market history and happen far more often than bear markets.
- Dividend
- A cash payment from a company's profits to its shareholders, often quarterly for US companies. Dividends are decided by the board and can be raised, cut or cancelled. See how the stock market works.
- Dividend yield
- The annual dividend per share divided by the share price, as a percentage. A share at $50 paying $1.50 a year yields 3%. A very high yield can signal that the market expects a cut.
- Earnings per share (EPS)
- A company's profit over a period divided by the number of its shares. It is the 'E' in the P/E ratio and the figure most closely watched in quarterly results. Reported EPS can be affected by one-off items, so companies and analysts often also quote an adjusted figure.
- ETF (exchange-traded fund)
- A fund whose units are bought and sold on a stock exchange like a share. Most ETFs track an index, giving exposure to many companies in one purchase, for an annual ongoing charge. Because units trade all day, their price can differ slightly from the value of the fund's holdings, though the gap is usually small for large funds.
- Ex-dividend date
- The first day on which buying a share no longer entitles you to the next dividend. The share price usually drops by roughly the dividend amount at the open that day.
- Expense ratio
- The annual cost of running a fund, expressed as a percentage of its assets and taken out of the fund automatically. Also called the ongoing charge. See our fees guide.
- Float-adjusted market capitalisation
- A company's market value counting only the shares actually available to public investors, excluding large locked-up holdings. The S&P 500 uses this measure to weight its members.
- Futures contract
- An agreement to buy or sell something at a set price on a future date, traded on an exchange. Stock index futures trade nearly around the clock and are watched as an early signal before the stock market opens. See US futures explained.
- Halving
- The scheduled cut in the number of new bitcoin created with each block, occurring roughly every four years. The most recent, in April 2024, reduced the reward to 3.125 BTC. See what is Bitcoin.
- Index
- A number that tracks the combined value of a basket of shares or other assets, such as the S&P 500 or FTSE 100. Indices are used to measure markets and as the basis for index funds. How members are weighted, by market value or by share price, changes what the index actually tells you.
- Index fund
- A fund that aims to match the performance of an index by holding its components, rather than having a manager choose investments. Index funds usually have low ongoing charges. They are not designed to beat their index; the aim is to deliver the market's return, minus a small fee.
- Leverage
- Using borrowed money or a deposit to control a position larger than your own capital. It magnifies gains and losses equally. Retail leverage on CFDs is capped in the UK, EU and Australia. See the margin calculator.
- Limit order
- An instruction to buy at no more than, or sell at no less than, a price you set. It protects the price but may not be filled if the market never reaches your level. Limit orders are especially useful in thinly traded shares and outside main trading hours.
- Liquidity
- How easily something can be bought or sold without moving its price much. Large shares and major currency pairs are highly liquid; small companies and minor tokens often are not, which shows up as wider spreads.
- Lot
- The standard unit of size in forex trading. A standard lot is 100,000 units of the base currency, a mini lot 10,000 and a micro lot 1,000. For gold a lot is commonly 100 ounces.
- Margin
- The deposit required to open and keep a leveraged position. It is not a fee; it is set aside while the position is open. If losses shrink your equity too far, the provider may close positions.
- Market capitalisation
- The total market value of a company's shares: share price multiplied by the number of shares in issue. Companies are often grouped as large-cap, mid-cap or small-cap by this measure. It measures what the market values the shares at, not what the business owns.
- Market order
- An instruction to buy or sell straight away at the best available price. It is fast, but the price you get can differ from the one on screen, especially in fast or thin markets.
- Nominee account
- An arrangement in which a broker holds shares in its name on your behalf, while you remain the beneficial owner. It is the usual way retail shareholdings are kept in many markets. Regulated brokers must keep these holdings separate from their own assets.
- P/E ratio
- Price-to-earnings ratio: the share price divided by earnings per share over a year. It shows how much investors pay for each unit of profit and is one of the most quoted valuation measures. A trailing P/E uses the past year's earnings; a forward P/E uses forecasts, which may prove wrong.
- Pip
- The standard step in a currency price: 0.0001 for most pairs and 0.01 for pairs quoted in Japanese yen. On one standard lot of a USD-quoted pair, a pip is worth $10. Try the pip calculator.
- Pre-market
- Trading in US shares before the regular 09:30 New York open, usually with thinner volume and wider spreads. Prices set here can change quickly once the main session begins.
- Price-weighted index
- An index in which higher-priced shares carry more weight regardless of company size. The Dow Jones Industrial Average and Nikkei 225 are the best-known examples.
- Rebalancing
- Adjusting holdings back to a chosen mix, or, for an index, updating its members and weights on a set schedule. Investors often rebalance once a year so no single holding drifts too large. Rebalancing can involve selling what has risen, which feels uncomfortable but keeps risk where you intended it.
- Spread
- The difference between the bid and ask prices. It is a cost you pay each time you buy and later sell, and it widens when markets are quiet, volatile or closed elsewhere.
- Stablecoin
- A crypto token designed to hold a steady value, usually one US dollar, backed by reserves held by its issuer. USDT is the largest. See what is USDT.
- Stop-loss order
- An instruction to close a position automatically if the price moves against you to a set level. In fast markets or after a gap it may be filled at a worse price than the level you chose.
- Swap (overnight financing)
- A charge or credit applied to leveraged positions held past the daily cut-off, based on interest rates and the full position size. In forex a triple charge usually falls on Wednesday.
- T+1 settlement
- The rule that a trade is completed one business day after the trade date, when cash and shares formally change hands. US shares have settled on T+1 since May 2024.
- Total return
- The full return from an investment including both price changes and income such as dividends, usually assuming the income is reinvested. It gives a fairer picture than price change alone, particularly for comparing shares or funds with very different dividend policies.
- Volatility
- How much and how quickly a price moves up and down. Higher volatility means a wider range of possible outcomes over any period, in both directions. It is commonly measured by the standard deviation of returns, and it tends to rise sharply when prices are falling.