Investment dictionary - Glossary of trading and financial terms

a - B

C - D

E - F

G - H

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52-week high/low

The highest, or lowest, price a share has traded at in a passing year.

Account balance

The amount of money a user has stored in a financial repository.

Accounting standards

The rules a company follows when preparing financial statements.

After-hours trading

Trading outside of a stock exchange's opening hours.

Alpha

The percentage by which an investor outperforms a relevant benchmark.

American Depository Receipt (ADRs)

Tradeable assets that let Americans invest in overseas stocks using US laws and dollars.

Annualised Rate of Return

The average annual return an investor sees over a set period of time.

Arithmetic Mean

The sum of a set of numbers added together and then divided by the total amount of numbers in that set.

Balance sheet

We look at what a balance sheet is and how to understand one

Balance sheet

A summary of a company's finances, including its assets, liabilities and shareholder equity.

Bed & ISA

Understand what Bed and ISA is and how does it work

Collective investment scheme

Learn what's a collective investment scheme

Compound interest

Understand what compound interest means and how it's calculated

Depository

We look at what is a depository and what role they play in keeping markets work.

Diversification

An investment strategy in which money is put into a variety assets.

ESG investing

ESG is a hot topic right now for investors. Understand what ESG investing is all about and how you can use it to diversify your portfolio.

Earnings per share

We look at what earnings per share mean and how to calculate it

Equity

The amount of money a company would be left with by subtracting its liabilities from the value of its assets.

Equity ETF

An exchange-traded fund that is comprised of a set of stocks.

Exchange-Traded Fund (ETF)

A collection of investments, pooled into a single fund that can be bought and sold on a stock exchange.

Fixed Income

An investment that provides a fixed rate of return, often over a specific set of time.

Free Trade

The other free trade. International trade in which countries allow goods to flow across their borders without imposing import or export taxes.

Fundamentals

The data or information that is likely to impact a company's stock price.

Geometric Mean Return

A way of calculating compound returns on an investment or savings over a set period of time.

Global Investment Performance Standards (GIPS)

A set of standards which investors use to present their investment results.

Gross Margin

The difference between a company's revenue and the cost to produce its goods/services, divided by revenue.

Hedge Fund

Investment funds that are often associated with riskier and shorter-term trading strategies.

Holding Period Return

The amount of money generated by an asset during the time that it was held by an investor..

Hypothesis Testing

A mathematical test used to determine whether a claim is true or false.

Income statement

A summary of a company's income and expenses over a set period of time.

Individual Savings Account (ISA)

Find out what ISA stands for

Inflation

The increase in the prices of goods and services over time, and the process by which money loses its value.

Interest Rate

The amount a lender charges for lending your money, or a borrower pays you for borrowing your money.

Internal Rate of Return (IRR)

A means of calculating the potential future return on an investment.

Investment Return

The amount of money made or lost from an investment. Usually expressed as a percentage.

Investment Trust

A company that pools money together from multiple investors and then invests it.

Junk Bond

A form of debt investment that carries higher risk because of the likelihood that the issuer will default.

Key Information Document (KID)

A document issued by an investment fund to help investors determine if it's the right fund for them.

Know Your Customer (KYC)

A legal requirement for financial firms to understand exactly who their customers are. Used to prevent money laundering and terrorist financing.

LSE

London Stock Exchange, which was founded in 1571 and now has a market cap of almost $5 trillion.

Leverage

A method of trading using borrowed money that usually involves a very high level of risk.

Limit order

Learn what a limit order is and how to use it to make the most of your portfolio.

Margin call

Learn what a margin call stands for in financial terms.

Money laundering

A method of moving money obtained illicitly through the financial system so it can be used legally.

Money weighted rate of return

Learn what Money Weighted Rate of Return or MWRR stands for in finance.

NASDAQ

A US stock exchange specialising in the shares of technology companies.

NYSE

The world's largest stock exchange. Wall St HQ.

Net Asset Value (NAV)

The value of a company's assets relative to the number of shares it has.

Net Income (NI)

The money a firm is left with from sales after subtracting taxes and different business costs.

OEIC

Unique to the UK, these funds pool together money to invest from multiple investors.

Oligopoly

A situation in which a market or industry is controlled by a small group of companies.

Over-The-Counter (OTC)

A security that is sold outside of an exchange.

Packaged Retail and Insurance-based Investment Product (PRIIP)

An investment where, regardless of its legal form, the amount repayable to the retail investor is subject to fluctuations.

Ponzi Scheme

A form of fraud designed to lure new investors, and pays the earlier backers by using the new investors' money.

Professional Client

An investor that is able to meet several regulatory criteria.

Profit and Loss Statement (P&L)

A statement that summarises firm's expenses, costs, and revenues incurred during a time period. AKA income statement.

Quantitative easing

Find out what quantitative easing is and how central banks use this monetary measure to encourage economic growth.

Quick ratio

Learn what quick ratio stands for in financial terms and how to calculate it.

Rate of Return

Profit on an investment, expressed as a percentage of the investment.

Real Estate Investment Trust (REIT)

An investment trust specialised in investing in commercial property such as parking garages or GP offices.

S&P 500

Find out what is the definition of the S&P 500 index.

Spot Rate

The currency exchange rate a bank quotes, valid with immediate effect.

Stock Exchange

A physical/digital place where stockbrokers and traders can buy and sell securities.

Stock Market

A place where shares of publicly listed companies are traded.

Technical Analysis

Examining price movements of shares and other assets, and trying to predict how they will move in the future.

Time Value of Money

The concept that money you have now is more valuable than the same sum in the future.

Time-Weighted Rate of Return (TWRR)

A return calculated over the time period invested, that excludes extraneous elements, such as deposits to and withdrawals from the investment accounted.

Unicorn

A startup valued at over £1 billion. They are rare, hence the name.

Unit Trusts

A collective investment scheme the investors pay money into in exchange for units. The money is invested in a diversified portfolio of assets.

United States Dollar (USD)

The famous greenback our friends in the US use as currency.

Value Investing

The art of buying shares which trade below their value, according to the analysis of the value investor.

Venture Capital

A type of financing that investors provide to startups, who sometimes announce getting said financing in TechCrunch, to big fanfare.

Venture Capital Trust (VCT)

A listed company run by a fund manager, investing mainly in private companies.e.

Volatility

A measure of how much the prices of an asset or index vary over time.

W-8BEN Form

Non-US individuals and businesses may have to file this form for the Internal Revenue Service (IRS), the US tax authority.

Wall Street

A street in New York that became a figure of speech for the financial markets of the US.

Withholding Tax

A tax deduction made at the source of the payment.

Xetra

A trading venue operated by the Frankfurt Stock Exchange.

Year to Date (YTD)

A period of time that starts with the first day of the current calendar year and ends with today.

Yield

Income from an investment as a percentage of its current price.

Zero-Sum Game

A situation in which one person's gain is another's loss.

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Dictionary

The A-Z of financial markets

When you invest, your capital is at risk.

#

52-week high/low

A - B

Account balance

Accounting standards

After-hours trading

Alpha

American Depository Receipt (ADRs)

Annualised Rate of Return

Arithmetic Mean

Balance sheet

Balance sheet

Bed & ISA

Beta

Bond

Bull market

C - D

Capital

Collective investment scheme

Compound interest

Costs and Charges

Custodian bank

Depository

Diversification

E - F

ESG investing

Earnings per share

Equity

Equity ETF

Exchange-Traded Fund (ETF)

Fixed Income

Free Trade

Fundamentals

G - H

Geometric Mean Return

Global Investment Performance Standards (GIPS)

Gross Margin

Hedge Fund

Holding Period Return

Hypothesis Testing

I - J

Income statement

Individual Savings Account (ISA)

Inflation

Interest Rate

Internal Rate of Return (IRR)

Investment Return

Investment Trust

Junk Bond

K - L

Key Information Document (KID)

Know Your Customer (KYC)

LSE

Leverage

Limit order

M - N

Margin call

Money laundering

Money weighted rate of return

NASDAQ

NYSE

Net Asset Value (NAV)

Net Income (NI)

O - P

OEIC

Oligopoly

Over-The-Counter (OTC)

Packaged Retail and Insurance-based Investment Product (PRIIP)

Ponzi Scheme

Professional Client

Profit and Loss Statement (P&L)

Q - R

Quantitative easing

Quick ratio

Rate of Return

Real Estate Investment Trust (REIT)

S - T