American depository receipts. Certificates issued by a bank saying that a specific amount of a company’s shares have been deposited with them. Traded on US exchanges as if they were US securities.
Annual equivalent rate. The equivalent rate if interest were added to an investment yearly.
Annual general meeting. When company directors present the annual report to shareholders. Listed companies must hold this meeting once a year.
Alternative Investment Market. The London Stock Exchange’s market for smaller, newer companies.
Annual percentage rate. The rate of interest you pay on money you borrow.
The gain or loss on an investment expressed as a percentage of invested capital. Focus on the return that an investment fund achieves over a period of time not in comparison to rivals or peers. Often employing diverse investment techniques including short selling, futures, options, derivatives, arbitrage, leverage and unconventional assets.
To build up.
Interest earned either since the start of the investment or since the last interest payment date.
The performance of an investment compared with a suitable market index.
Any cryptocurrency that isn’t Bitcoin.
Investments other than shares, bonds or cash.
Decrease in an asset’s value over time.
Distributed yearly to a company’s shareholders. Contains the company’s accounts and runs through the past business year.
The purchaser of an annuity enters a contract with an insurer whereby an upfront lump sum payment is exchanged for a guaranteed income stream. Annuities are popular in retirement planning as they can allow retirees to lock in a given level of income for the remainder of their lives.
The rise in the value of an asset.
Taking advantage of price differences of the same item in different markets.
Price to buy, such as a CFD or a forex base currency.
Something that has a value to its owner. Often used to refer to a specific tradable item, such as an individual stock, commodity or currency pair.
Securities where the income comes from a pool of underlying assets.
Investments of a similar type, such as equities.
Selling off a company’s assets rather than developing the business.
All-time-high – the highest price an assets or index has ever reached.
At the money
When an option’s strike price is the same as the current price.
Authorised share capital
The amount of share capital that a company is allowed to allocate to shareholders.
Average earnings growth
An indicator of future inflation rates.
A trading technique in which you buy a falling stock with sound fundamentals and keep buying as if falls further. It works on the basis that the more you buy at a cheaper price, the lower the average price of your stock and the more you will make, or the earlier you can sell at a profit, when the price rebounds.
Bank for International Settlements. Based in Switzerland.
Backwardation refers to the situation in which the spot or cash price of a commodity is higher than the forward price. It is the reverse of contango.
Balance of payments
Money going into a country minus money going out during a particular period.
A summary of a company’s assets and liabilities taken at a particular point.
A way of allocating shares when issues are oversubscribed.
Person left holding an asset that has become worthless.
Bank of England
The UK’s central bank. Founded in 1694. Based on Threadneedle Street, London.
The first currency in a currency pair.
The minimum interest rate at which banks will lend to customers. Decided in the UK by the Bank of England’s monetary policy committee (MPC), and in the euro zone by the European Central Bank (ECB).
One hundredth of 1%.
An investor who looks to profit from a downturn in the market or the price of a particular share.
Pessimistic that the market will fall.
A general decline in stock market prices over time. Usually accompanied by widespread pessimism.
A concerted attempt to force down the price of a stock to cover a short position.
Something that the performance of an investment can be compared against, such as an index.
A measure of the volatility of an investment relative to the market as a whole.
Specific sub-conscious behaviours (called representativeness heuristics) in trading psychology that affect individual trader’s actions. Common ones include overconfidence loss aversion, herding, confirmation, anchor bias, the disposition effect and the hot hand fallacy. Here is a list of 50 biases. https://capital.com/top-50-cognitive-biases-list
The difference between the buying price (offer) and the selling price (bid) of shares, currency etc.
The price at which the market will buy the product.
Big Mac index
Uses the cost of a Big Mac in different countries to compare purchasing power.
The original cryptocurrency.
An event that is extremely hard to predict. Derives from Nassim Nicholas Taleb's book of the same name.
A way of pricing options.
The digital ledger that records all cryptocurrency transactions.
A high-quality company. Derived from blue being the highest value poker chip.
A fixed-term loan to a company or institution.
Extra shares issued free to existing shareholders. Also known as a scrip issue.
The purchase cost of assets.
Buying shares when the price is thought to have bottomed out after falling sharply.
An investment approach based on picking individual stocks.
Another name for a stock exchange.
A benchmark oil.
Buys and sells investments for clients.
When the price of an asset rises far higher than can be justified by fundamentals. Likely to be followed by a collapse in price.
Public spending and how it will be paid for.
An investor who looks to profit from an upturn in the market or the price of a particular share.
Confident the market will rise.
A market with a general upward trend over time. Usually accompanied by widespread optimism.
Germany’s central bank
The move between boom and bust.
Low prices and plentiful supply.
When a controlling stake in a company is bought by a single party.
France’s version of the FTSE 100 but with 40 companies in the index.
Collateralised Debt Obligation. An asset-backed security where the underlying assets are various debt obligations. Doesn’t have a good reputation.
Contract for difference. A derivative where the parties agree to settle the difference in opening and closing prices. Uses leverage.
Consumer Price Index. A measure of consumer price inflation based on the cost of a basket of common household goods. The main measure of inflation in the UK.
The US dollar/GB pound pair, represented as USD/GBP.
A further payment for partly-paid shares.
A bond where the issuer has the option to redeem it early.
Short-term finance repayable on demand.
The right to buy an agreed amount of a commodity or security for an agreed price by an agreed date.
Shows trading range and opening and closing prices for a day.
Money or assets put to economic use.
Money spent on fixed assets.
Capital gains tax
Tax charged on certain investment gains above an annual limit.
Markets where money is raised and securities traded.
Money received from selling fixed assets.
When a currency that has a low interest rate is borrowed to purchase another currency with a higher interest rate.
A county court judgment. When the court issues an order that you must pay a specific debt. Will worsen your credit rating and may impede your ability to borrow, or raise the price at which you can borrow.
The banker to the government and other banks in a country, such as the Bank of England.
Certificate of deposit
A fixed-term, fixed-interest deposit with a bank or building society. Also known as a CD.
One that may incur capital gains tax.
The study of historical market data to try and predict future movements.
Collectibles that can be bought and sold as investments, such as antique furniture, stamps, artwork, jewellery.
Controls to stop conflicts of interest in financial institutions that offer a range of services.
Excessive dealing in securities.
A legal action by a group of investors against a company or its directors to gain compensation for alleged negligence or illegal behaviour.
The price of a bond excluding any accrued interest.
Close a position
Sell an asset you are holding or buy a asset you have sold short.
The end of the trading day on the New York Stock Exchange and NASDAQ.
Collective investment scheme
A fund in which individual investors hold units of a pool of assets, such as a unit trust.
The amount paid to brokers for their services.
A physical item that can be processed and sold on, such as metals and oil.
Common investment fund
Where two or more entities pool assets together for investment.
One with fewer stocks than usual.
Increasing the nominal value of shares and decreasing the number in issue.
Financial stress in one area spreading to another indirectly related area.
Contango describes the typical situation where the futures price of a commodity is higher than the expected spot price at maturity of the futures contract. Contango is normal for a non-perishable commodity as storage fees and the time value of money translates into a cost of carry.
The standard unit of forex trading.
Written confirmation of the purchase or sale of an investment.
One with the coupon and principal payments fixed at the time of issue.
One that can be exchanged for stock in the same company.
The way in which a company is directed and managed.
Specialise on hostile takeovers of companies with undervalued assets.
Paid by UK companies on their profits. Currently 19%.
The second currency in a currency pair.
A party in a financial transaction.
The regular interest payment due on a bond.
Credit default swap
A type of derivative that offers a guarantee against the non-payment of a debt. Also known as a CDS.
An assessment of how likely a bond issuer is to meet their obligations.
A UK system for holding and transferring securities electronically.
A pair of currencies that does not include the US dollar.
An encrypted digital currency. Bitcoin is the most famous example.
The system of money in general use in a country. Currencies have names, symbols and internationally recognised three-letter abbreviations. The dollar, $, USD. In the UK the short forms of ‘pound’ and ‘sterling’ are also used. Great British pound sterling, £, GBP.
Two currencies that make up a foreign exchange rate.
One that fares better in good times, such as a company selling discretionary items.
Deutsche Aktienindex. An index of 30 blue chip German companies listed on the Frankfurt Stock Exchange.
Depository Trust and Clearing Corporation. Provides clearing and settlement services to the US financial markets.
Delivery versus payment. The simultaneous transfer of securities and cash between parties.
Secretive way of trading large volumes of shares.
When an investor buys a substantial number of shares in a company as soon as the market opens. Often a prelude to a takeover bid.
Buying and selling stocks during a trading day leaving no open positions at the close of the session.
Dead cat bounce
A brief resurgence during a concerted fall in price. Derived from the idea that even a dead cat will bounce if it falls from a great height.
One that is generally immune to changes in the general economic climate, such as a utility stock.
A defined benefit pension scheme is much coveted as it will pay out a secure income for life on retirement that will typically increase each year in line with inflation. Such plans have become increasingly rare as they can be relatively expensive for employers to service over time.
Defined contribution schemes are occupational pension plans where the value of the ultimate benefits payable from depend on factors such as the amount of contributions paid, the investment return achieved on the funds invested. Contributions come from both the employer and employee.
A general decrease in the price of goods and services.
Fall in the value of an asset due to wear and tear, age and obsolescence.
A contract that derives its value from the performance of its underlying asset.
A mathematical technique for expressing future cashflow at a current value.
A company giving cash or other assets to its shareholders.
Spreading investment funds among different kinds of assets to lower risk.
After-tax profit distributed to shareholders.
Focus not just on rising share price but on the amount returned to shareholders in dividend payments, usually reinvesting the dividends in more stock. Sometimes called a DRIP - dividend reinvestment plan.
Dividend per share divided by price per share. Usually expressed as a percentage.
A chronically underperforming share.
Someone whose top monetary policy priority is low unemployment.
Dow Jones Industrial Average
A price-weighted average of 30 blue chip stocks listed on the New York Stock Exchange. One of the oldest and most widely quoted stock market indices. Also known as the Dow.
Sale of a stock at one tick down from the previous sale price.
A benchmark oil.
Duration is a measure of the sensitivity of the price of a bond to changes in interest rates. In general, in tends to be higher for government bonds with longer periods to go until maturity. Bond prices are inversely related to interest rates.
A levy on the purchase of a specific product or raw material (or import). It is a kind of consumption tax. Examples include Stamp duty (on property and shares), fuel duty (on petrol and diesel) and alcohol duties.
Earnings before interest and tax.
Earnings before interest, tax, depreciation and amortisation. Measures a company’s short-term cash flow generation in relation to its market valuation.
European Central Bank. The central bank for the European Union.
Elliott wave principle
Technical theory of trading based on analysing investor psychology, prices and other factors.
Exchange-traded commodity. Tracks the price of the underlying commodity. Traded like shares.
Exchange-traded fund. The underlying assets of the fund are divided into shares, which are then traded. Usually follows an index.
Exchange-traded products. Examples are ETCs and ETFs.
Earnings per share
Profits after tax divided by the number of shares issued.
The enterprise value tends to be thought of as a theoretical takeover price if a company were to be bought. It is calculated as market capitalisation plus debt, minority interest and preferred shares, minus total cash and cash equivalents.
The capital of a company that is owned by ordinary shareholders.
The value of something less money owing on it.
Official market place for trading assets, (stock exchange, commodity exchange, currency exchange).
The buying and selling of an investment.
The price at which an option holder can exercise their option.
A payment made by where there is no legal liability to pay.
The last date on which an option can be exercised.
Financial Conduct Authority. Regulates the financial services industry in the UK.
The most widely used index for tracking the London market. Contains the 100 most capitalised companies on the London Stock Exchange.
Index of the next 250 largest companies on the London Stock Exchange.
Index of the FTSE 100 and FTSE 250 combined.
Index of all companies listed on the London Stock Exchange.
Index of the companies outside the top 350 on the London Stock Exchange.
All the tech stocks listed on the London Stock Exchange.
A series of ethical stock market indexes launched by FTSE.
A keyboard input error in the financial markets such as the stock market or foreign exchange market whereby an order to buy or sell is placed of far greater size than intended, for the wrong stock or contract, at the wrong price, or with any number of other input errors.
A mathematical theory for stock trading.
Abbreviation for the Federal Reserve Board.
Federal Reserve Board
Oversees the Federal Reserve Banks and helps establish US monetary policy.
Federal Reserve System
The US’s central bank. Also known as the Fed. There are 12 central reserve districts all with their own Federal Reserve bank.
A currency set as legal tender by a government but that has no intrinsic value – banknotes, rather than gold.
Financial Ombudsman Service (FOS)
An independent service to rule on complaints that remain unsolved through normal company complaints procedures. The decision of the ombudsman is binding, unless the firm appeals to the court. You must give the regulated firm eight weeks to resolve your complaint internally before going to the ombudsman.
A company’s financial year can start when it likes. The most popular year-ends are 31 March and 31 December.
(UK) Relating to government revenue, especially taxes. (US) Relating to financial matters.
(US) A year-long period that a company or government uses for accounting and annual reports. (UK) The year from 6 April to 5 March each year.
Stay the same regardless of a company’s output.
A very rapid, deep, and volatile fall in security prices occurring within an extremely short time period. The May 6, 2010, flash crash was a trillion-dollar stock market crash on Wall Street, which started at 2:32pm EDT and lasted for 36 minutes.
The process of a privately-owned company becoming a listed company.
Splitting from the original blockchain and creating a new version of an existing cryptocurrency.
Foreign exchange market. Where one currency is exchanged for another.
A private agreement to buy or sell something in the future.
Fear of missing out. Investing, without any analysis, just because everyone else is and they seem to be making money.
Fear, uncertainty and doubt. Baseless negativity spread intentionally by a short seller who benefit if price of something to drop.
Short-seller spreading FUD.
Analysis of the value of a company using its accounts, its competition and the economy in general.
A more formal version of a forward contract, often used to hedge against movements in price of the underlying asset.
Foreign exchange market. Where one currency is exchanged for another.
Gross domestic product. The sum of all goods and services produced in the economy.
Global depository receipt. Derivative equities traded on foreign markets.