A
Accumulation/Distribution
Indicators
ADVANCED
▼
The Accumulation/Distribution line uses price and volume to show whether a stock is being accumulated (bought) or distributed (sold). Rising A/D line suggests accumulation; falling suggests distribution. Divergence between A/D and price can foreshadow trend reversals.
Active Investing
Investing
BEGINNER
▼
Active investing involves selecting individual stocks or funds with the aim of outperforming the market. It requires research, analysis and ongoing monitoring. While active investing can generate higher returns, most active managers underperform passive index funds over the long term.
ADX
Indicators
INTERMEDIATE
▼
After-Hours
Market Structure
INTERMEDIATE
▼
After-hours trading takes place after the regular market close, typically 4:00 PM to 8:00 PM in the US. Companies often report earnings after hours, causing significant price moves. Like pre-market, volume is lighter and spreads are wider.
AIM
Market Structure
INTERMEDIATE
▼
AIM (Alternative Investment Market) is a sub-market of the London Stock Exchange designed for smaller, growing companies. AIM companies have lighter listing requirements than the main market. While AIM offers opportunities for high growth, these stocks carry significantly higher risk.
Alpha
Risk Management
INTERMEDIATE
▼
Alpha is the excess return of an investment compared to its benchmark. Positive alpha means you've beaten the market; negative alpha means you've underperformed. Generating consistent alpha is the goal of active fund managers and traders.
Analyst Rating
Fundamental Analysis
BEGINNER
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An analyst rating is a recommendation from a financial analyst on whether to buy, hold or sell a stock. Ratings are typically based on detailed research into the company's fundamentals and industry. While useful, analyst opinions should be one input among many in your decision-making.
Ascending Triangle
Chart Patterns
BEGINNER
▼
An ascending triangle has a flat resistance level and rising support, forming a bullish pattern. Each low is higher than the last, showing increasing buying pressure against a fixed ceiling. The expected breakout is upward through resistance.
Ask
Basics
BEGINNER
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Asset
Basics
BEGINNER
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An asset is anything of value that can be owned or traded. In investing, common asset classes include equities (stocks), bonds, commodities, property and cash. Spreading money across different asset classes is called asset allocation.
Asset Allocation
Investing
BEGINNER
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Asset allocation is how you divide your portfolio across different asset classes — stocks, bonds, cash, property and alternatives. Your allocation determines most of your portfolio's risk and return characteristics. A common starting point is '100 minus your age' in stocks, with the rest in bonds.
At the Money
Derivatives
INTERMEDIATE
▼
An option is 'at the money' (ATM) when the stock price equals or is very close to the strike price. ATM options have the highest time value and are most sensitive to price changes. They're a balanced choice between cost and profit potential.
ATR (Average True Range)
Indicators
INTERMEDIATE
▼
ATR measures market volatility by calculating the average range between high and low prices over a set period. It doesn't indicate direction, only how much a stock typically moves. Traders use ATR to set appropriate stop losses — a common rule is placing stops 1.5-2x ATR from entry.
B
Backtesting
Technical Analysis
INTERMEDIATE
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Backtesting involves testing a trading strategy against historical price data to see how it would have performed. It helps traders evaluate whether a strategy is profitable before risking real money. However, past performance doesn't guarantee future results.
Bear Market
Basics
BEGINNER
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A bear market is a period when stock prices fall 20% or more from recent highs, often lasting months or even years. Bear markets are typically caused by economic slowdowns, recessions or widespread fear among investors. They can create buying opportunities for long-term investors.
Benchmark
Basics
BEGINNER
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Beta
Risk Management
INTERMEDIATE
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Beta measures a stock's volatility relative to the overall market. A beta of 1.0 means it moves with the market; above 1.0 means more volatile; below 1.0 means less volatile. Defensive stocks like utilities have low betas; growth stocks tend to have high betas.
Bid
Basics
BEGINNER
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The bid is the highest price a buyer is currently willing to pay for a stock. When you sell shares, you typically receive the bid price. The difference between the bid and ask price is called the spread.
Blue Chip
Basics
BEGINNER
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A blue chip stock is a large, well-established company with a history of reliable performance and often steady dividends. Examples include Shell, Unilever and Apple. Blue chips are considered lower risk but may offer slower growth than smaller companies.
Bollinger Bands
Indicators
INTERMEDIATE
▼
Bollinger Bands are three lines on a chart: a middle SMA with upper and lower bands at two standard deviations. When price touches the upper band, it may be overbought; the lower band, oversold. Bands squeezing together often precede a big move.
Book Value
Fundamental Analysis
INTERMEDIATE
▼
Book value is a company's total assets minus its total liabilities — essentially what shareholders would receive if the company was liquidated. Price-to-book ratio compares the share price to book value per share. A stock trading below book value may be undervalued, or the market may see problems ahead.
Breakdown
Technical Analysis
BEGINNER
▼
Breakout
Technical Analysis
BEGINNER
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A breakout occurs when a stock's price moves above a resistance level or out of a chart pattern with increased volume. Breakouts can signal the start of a new uptrend and are popular entry points for traders. False breakouts (fakeouts) are common, so many traders wait for confirmation.
Broker
Basics
BEGINNER
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Bull Market
Basics
BEGINNER
▼
A bull market is a period when stock prices are rising or expected to rise, typically by 20% or more from recent lows. Bull markets are driven by investor optimism, strong economic growth and confidence. The opposite of a bull market is a bear market.
Buy
Order Types
BEGINNER
▼
A buy order is an instruction to purchase shares of a stock. Going 'long' means buying with the expectation that the price will rise. You profit when the stock price increases above your purchase price.
Buy and Hold
Investing
BEGINNER
▼
Buy and hold is an investment strategy where you purchase stocks and hold them for the long term, regardless of short-term price fluctuations. The logic is simple: over time, quality companies and the broad market tend to rise. It's the strategy followed by Warren Buffett and most successful long-term investors.
C
Calls
Derivatives
INTERMEDIATE
▼
A call option gives you the right to buy a stock at a specified price (strike price) before the expiry date. You buy calls when you expect the price to rise. If the stock surpasses your strike price, the call becomes profitable.
Candlestick
Technical Analysis
BEGINNER
▼
A candlestick is a type of price chart that shows the open, high, low and close for a given period. The body shows the range between open and close, while the wicks show the highs and lows. Candlestick patterns are one of the most popular tools in technical analysis.
Capital Gains
Investing
BEGINNER
▼
Cash Flow
Fundamental Analysis
BEGINNER
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Cash flow is the actual money flowing in and out of a business. It's different from profit because it strips out non-cash items like depreciation. A company can be profitable on paper but run out of cash — that's why cash flow is so important to monitor.
CCI
Indicators
ADVANCED
▼
The Commodity Channel Index (CCI) measures how far the current price deviates from its statistical mean. Readings above +100 suggest overbought conditions; below -100 suggest oversold. Despite its name, CCI works on stocks, indices and forex, not just commodities.
CFD
Derivatives
INTERMEDIATE
▼
A CFD (Contract for Difference) is a derivative that lets you speculate on price movements without owning the underlying asset. You profit from the difference between the opening and closing price. CFDs offer leverage but carry significant risk — most retail traders lose money trading CFDs.
Chaikin Money Flow
Indicators
ADVANCED
▼
Chaikin Money Flow measures buying and selling pressure over a set period by combining price and volume. Positive values indicate buying pressure; negative values indicate selling pressure. It helps confirm whether a trend is supported by volume.
Channel
Chart Patterns
BEGINNER
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A channel (or trading channel) is formed by drawing parallel trendlines connecting the highs and lows of a trending stock. Traders buy near the lower trendline and sell near the upper trendline. A break outside the channel can signal acceleration or reversal of the trend.
Chart Pattern
Technical Analysis
BEGINNER
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A chart pattern is a recognisable shape formed by price movements on a chart that suggests a likely future direction. Common patterns include head and shoulders, double tops, triangles and flags. Patterns are a cornerstone of technical analysis.
Circuit Breaker
Market Structure
INTERMEDIATE
▼
A circuit breaker is a mechanism that temporarily halts trading across an entire market when prices fall too rapidly. The S&P 500 has circuit breakers at 7%, 13% and 20% declines. They prevent panic selling by giving investors time to process information.
Competitive Advantage
Fundamental Analysis
INTERMEDIATE
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A competitive advantage is something that allows a company to outperform its rivals — better technology, lower costs, stronger brand or superior products. Sustainable competitive advantages lead to higher margins and market share over time. Identifying companies with durable advantages is key to successful long-term investing.
Compound Interest
Investing
BEGINNER
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Compound interest is earning interest on your interest, creating exponential growth over time. If you invest £1,000 at 10% annual return, after 10 years you'll have £2,594, not just £2,000. Einstein reportedly called it the eighth wonder of the world — start early to maximise its power.
Consolidation
Technical Analysis
BEGINNER
▼
Consolidation is a period where a stock trades within a narrow price range, moving sideways rather than trending. It often occurs after a big move as the market digests gains or losses. Breakouts from consolidation can lead to significant moves in either direction.
Correlation
Risk Management
INTERMEDIATE
▼
Correlation measures how two assets move in relation to each other, from -1 (opposite) to +1 (identical). Positively correlated stocks tend to rise and fall together; negatively correlated assets move in opposite directions. Understanding correlation helps build a truly diversified portfolio.
Cover
Order Types
ADVANCED
▼
To cover is to buy back shares that were previously sold short, closing the short position. Covering at a lower price than you shorted results in a profit. A 'short squeeze' occurs when many short sellers are forced to cover simultaneously, driving the price up sharply.
Cup and Handle
Chart Patterns
INTERMEDIATE
▼
A cup and handle is a bullish continuation pattern that looks like a tea cup on the chart. The cup forms as the price drops and recovers in a rounded shape, followed by a small pullback (the handle). A breakout from the handle is the buy signal.
Current Ratio
Fundamental Analysis
INTERMEDIATE
▼
The current ratio divides a company's current assets by its current liabilities, measuring its ability to pay short-term obligations. A ratio above 1.0 means the company has more short-term assets than debts. Below 1.0 could signal liquidity problems.
D
Day Order
Order Types
BEGINNER
▼
A day order expires at the end of the trading session if not filled. Most orders default to day orders unless you specify otherwise. If the stock doesn't reach your limit price by market close, the order is automatically cancelled.
DCF
Fundamental Analysis
ADVANCED
▼
Discounted Cash Flow (DCF) is a valuation method that estimates a company's value by projecting its future cash flows and discounting them back to today's value. It's considered the most theoretically sound valuation method. DCF requires assumptions about growth rates and discount rates, making it both powerful and subjective.
Debt-to-Equity
Fundamental Analysis
INTERMEDIATE
▼
The debt-to-equity ratio measures how much debt a company has relative to its shareholders' equity. A ratio of 1.0 means equal debt and equity; above 1.0 means more debt than equity. High debt increases risk, especially when interest rates rise.
Delta
Derivatives
ADVANCED
▼
Descending Triangle
Chart Patterns
BEGINNER
▼
A descending triangle has a flat support level and falling resistance, forming a bearish pattern. Each high is lower than the last, showing increasing selling pressure against a fixed floor. The expected breakdown is through support.
Divergence
Technical Analysis
INTERMEDIATE
▼
Divergence occurs when a stock's price moves in one direction while a technical indicator moves in the opposite direction. Bullish divergence (price makes lower lows, indicator makes higher lows) can signal an upcoming reversal upward. It's a powerful but not infallible signal.
Diversification
Risk Management
BEGINNER
▼
Diversification means spreading your investments across different assets, sectors, regions and asset classes to reduce risk. If one investment falls, others may hold steady or rise. The saying 'don't put all your eggs in one basket' perfectly captures this concept.
Dividend
Basics
BEGINNER
▼
A dividend is a payment made by a company to its shareholders, usually from profits. Dividends are typically paid quarterly or semi-annually and are expressed as a yield (percentage of share price). Companies like utilities and banks are known for paying regular dividends.
Dividend Reinvestment
Investing
BEGINNER
▼
Dividend reinvestment means using dividend income to purchase additional shares rather than spending it. This compound growth effect can significantly boost long-term returns. A £10,000 investment yielding 4% with reinvested dividends grows much faster than one where dividends are taken as cash.
Dividend Yield
Basics
BEGINNER
▼
Dividend yield is the annual dividend payment divided by the current share price, shown as a percentage. A high yield can be attractive for income investors, but an unusually high yield may signal the market expects a dividend cut. Always check whether the dividend is sustainable.
Doji
Chart Patterns
BEGINNER
▼
A doji is a candlestick where the open and close are virtually the same, creating a cross or plus shape. It signals indecision between buyers and sellers. A doji after a strong trend can indicate the trend is losing momentum and a reversal may follow.
Dollar Cost Averaging
Investing
BEGINNER
▼
Dollar cost averaging (DCA) means investing a fixed amount at regular intervals regardless of the stock price. You buy more shares when prices are low and fewer when high, averaging out your cost. It removes the emotion and guesswork of trying to time the market.
Double Bottom
Chart Patterns
BEGINNER
▼
A double bottom is a bullish reversal pattern where the price hits the same low level twice and bounces. It forms a 'W' shape on the chart. The pattern confirms when price breaks above the resistance level between the two troughs, signalling a potential uptrend.
Double Top
Chart Patterns
BEGINNER
▼
A double top is a bearish reversal pattern where the price reaches the same high level twice and fails to break through. It forms an 'M' shape on the chart. The pattern is confirmed when price breaks below the support level between the two peaks.
Dow Jones
Market Structure
BEGINNER
▼
The Dow Jones Industrial Average (DJIA) tracks 30 large US companies and is the oldest major stock market index. Unlike the S&P 500, it's price-weighted rather than market-cap weighted. The Dow is often quoted in news headlines but is considered a less comprehensive measure than the S&P 500.
Drawdown
Risk Management
BEGINNER
▼
Drawdown is the peak-to-trough decline in your account value, expressed as a percentage. If your account drops from £10,000 to £8,000, that's a 20% drawdown. Understanding drawdown is critical because a 50% loss requires a 100% gain just to break even.
DRIP
Investing
BEGINNER
▼
A DRIP (Dividend Reinvestment Plan) automatically uses your dividend payments to buy more shares instead of taking cash. Over time, this compounds your returns as you own more shares generating more dividends. DRIPs are powerful for long-term wealth building.
E
Earnings Report
Fundamental Analysis
BEGINNER
▼
An earnings report is a quarterly or annual financial statement released by a public company showing revenue, profit, EPS and other metrics. Earnings season is when most companies report, causing significant price movements. Beating or missing analyst expectations drives the immediate share price reaction.
EMA
Technical Analysis
BEGINNER
▼
An Exponential Moving Average (EMA) is similar to an SMA but gives more weight to recent prices, making it react faster to new information. The 9-day and 21-day EMAs are popular for short-term trading. EMAs are used in indicators like MACD.
Emergency Fund
Investing
BEGINNER
▼
An emergency fund is 3-6 months' worth of living expenses kept in easily accessible cash savings. Before investing in stocks, building an emergency fund ensures you won't be forced to sell investments at the worst time. It's the foundation of sound financial planning.
Engulfing Pattern
Chart Patterns
INTERMEDIATE
▼
An engulfing pattern occurs when a candle's body completely covers the previous candle's body. A bullish engulfing (green covers red) at a low suggests reversal upward; a bearish engulfing (red covers green) at a high suggests reversal downward. Volume confirmation strengthens the signal.
EPS
Fundamental Analysis
BEGINNER
▼
Earnings Per Share (EPS) is a company's net profit divided by the number of outstanding shares. It tells you how much profit each share generates. Rising EPS over time is a sign of a healthy, growing business.
Equity
Basics
BEGINNER
▼
ETF
Investing
BEGINNER
▼
An ETF (Exchange-Traded Fund) is a fund that trades on a stock exchange like a regular share. ETFs can track indices, sectors, commodities or themes. They combine the diversification of funds with the flexibility of stocks — you can buy and sell throughout the trading day.
Evening Star
Chart Patterns
INTERMEDIATE
▼
An evening star is a three-candle bearish reversal pattern — the opposite of a morning star. A bullish candle is followed by a small indecision candle, then a strong bearish candle. It warns that buying momentum has faded and sellers may take over.
Ex-Dividend
Basics
BEGINNER
▼
The ex-dividend date is the cutoff date for receiving a company's next dividend payment. If you buy shares on or after the ex-dividend date, you won't receive the upcoming dividend. The share price typically drops by roughly the dividend amount on this date.
Exchange
Basics
BEGINNER
▼
Expectancy
Risk Management
INTERMEDIATE
▼
Expectancy calculates the average amount you can expect to win (or lose) per trade. It combines win rate and average win/loss size: (Win% x Avg Win) - (Loss% x Avg Loss). Positive expectancy means your strategy is profitable over time.
Expiry
Derivatives
INTERMEDIATE
▼
F
Fair Value
Fundamental Analysis
INTERMEDIATE
▼
Fair value is an estimate of what a stock should be worth based on analysis of the company's financials, growth and market conditions. It's similar to intrinsic value but may also consider market comparisons. If the share price is below fair value, it might be a buying opportunity.
Fibonacci Retracement
Technical Analysis
INTERMEDIATE
▼
Fibonacci retracement is a technical tool that uses horizontal lines at key percentages (23.6%, 38.2%, 50%, 61.8%) to identify potential support and resistance levels. These levels are based on the Fibonacci sequence found in nature and mathematics. Traders use them to predict where pullbacks might end.
Flag
Chart Patterns
BEGINNER
▼
A flag is a small rectangular continuation pattern that forms after a sharp price move. The flagpole is the initial surge, and the flag is a brief consolidation that slopes against the trend. Flags typically resolve in the direction of the prior move.
Float
Basics
BEGINNER
▼
Float is the number of shares available for public trading, excluding shares held by insiders and restricted stock. A low float stock can be more volatile because there are fewer shares changing hands. Float is different from total outstanding shares.
FOK
Order Types
ADVANCED
▼
FOK (Fill or Kill) is an order that must be filled entirely and immediately, or it's cancelled completely. There are no partial fills — you get all the shares you want or none. FOK orders are used when you need a specific quantity and don't want a partial position.
Force Index
Indicators
ADVANCED
▼
The Force Index combines price change and volume to measure the power behind a price move. A strong up day on high volume produces a high positive reading. It helps confirm breakouts and identify when a trend may be weakening despite price still moving.
Forward
Derivatives
ADVANCED
▼
A forward contract is similar to a futures contract — an agreement to buy or sell at a set price on a future date. The key difference is forwards are private, customisable agreements (over-the-counter) rather than standardised exchange-traded contracts.
Free Cash Flow
Fundamental Analysis
INTERMEDIATE
▼
FTSE 100
Market Structure
BEGINNER
▼
FTSE 250
Market Structure
BEGINNER
▼
The FTSE 250 is an index of the next 250 largest UK companies after the FTSE 100. It's considered more representative of the UK domestic economy because FTSE 100 companies earn much of their revenue overseas. Many investors view the FTSE 250 as a better barometer of UK economic health.
Futures
Derivatives
ADVANCED
▼
G
Gamma
Derivatives
ADVANCED
▼
Gap
Technical Analysis
INTERMEDIATE
▼
A gap occurs when a stock's price opens significantly higher or lower than the previous close, leaving a blank space on the chart. Gaps are often caused by overnight news, earnings reports or market sentiment shifts. Some traders believe gaps tend to 'fill' — meaning the price returns to close the gap.
Growth Investing
Investing
BEGINNER
▼
Growth investing targets companies expected to grow earnings faster than average, even if their shares look expensive on traditional metrics. Growth investors focus on revenue growth, market opportunity and competitive advantages. Technology companies are classic growth investments.
Growth Stock
Fundamental Analysis
BEGINNER
▼
A growth stock is a company expected to grow its revenue and earnings faster than the market average. Growth stocks often have high P/E ratios because investors pay a premium for future potential. They typically reinvest profits rather than paying dividends.
GTC
Order Types
BEGINNER
▼
GTC (Good Till Cancelled) is an order type that remains active until it's either filled or you cancel it. Unlike day orders, GTC orders persist across trading sessions. They're useful for setting limit orders at prices you're willing to wait for.
Guidance
Fundamental Analysis
BEGINNER
▼
Guidance is a company's forecast of its future financial performance, usually given during earnings reports. Forward guidance on revenue and profit expectations can move the share price more than actual results. Lowered guidance often triggers selling even if current results were good.
H
Halt
Market Structure
BEGINNER
▼
A trading halt is a temporary suspension of trading in a specific stock, usually triggered by pending news, regulatory concerns or extreme volatility. Halts give the market time to digest important information. Trading resumes once the exchange is satisfied that orderly trading can continue.
Hammer
Chart Patterns
BEGINNER
▼
A hammer is a bullish candlestick pattern with a small body at the top and a long lower wick, at least twice the body's length. It appears at the bottom of a downtrend and signals potential reversal. The long wick shows sellers pushed price down, but buyers fought back to close near the high.
Harami
Chart Patterns
INTERMEDIATE
▼
A harami is a two-candle pattern where the second candle's body fits entirely within the first candle's body. A bullish harami appears in a downtrend; a bearish harami in an uptrend. It signals potential reversal, though it's considered a weaker signal than engulfing patterns.
Head and Shoulders
Chart Patterns
INTERMEDIATE
▼
Head and shoulders is a bearish reversal pattern with three peaks — the middle peak (head) is highest, flanked by two lower peaks (shoulders). When the price breaks below the neckline connecting the two troughs, it signals a trend reversal downward. It's one of the most reliable chart patterns.
Hedging
Risk Management
INTERMEDIATE
▼
Hedging is opening a position to offset potential losses in another position. For example, buying put options on a stock you own protects against price drops. Hedging reduces risk but also limits potential profit — it's like buying insurance for your portfolio.
I
Ichimoku Cloud
Indicators
ADVANCED
▼
The Ichimoku Cloud is a comprehensive indicator showing support, resistance, trend direction and momentum all at once. It consists of five lines that form a 'cloud' on the chart. Price above the cloud is bullish; below is bearish; inside the cloud suggests indecision.
In the Money
Derivatives
INTERMEDIATE
▼
An option is 'in the money' (ITM) when exercising it would be profitable. A call is ITM when the stock price is above the strike price; a put is ITM when below. ITM options have intrinsic value and cost more than out-of-the-money options.
Income Investing
Investing
BEGINNER
▼
Income investing focuses on building a portfolio that generates regular cash flow through dividends and interest payments. Income investors favour high-yield stocks, bonds and REITs. It's popular among retirees and those seeking financial independence through passive income streams.
Index
Basics
BEGINNER
▼
An index tracks the performance of a group of stocks to represent a market or sector. The FTSE 100 tracks the 100 largest UK companies, while the S&P 500 tracks 500 large US companies. Indices are used as benchmarks to measure investment performance.
Index Fund
Investing
BEGINNER
▼
An index fund is a fund that tracks a specific market index, like the FTSE 100 or S&P 500, by holding the same stocks in the same proportions. They offer instant diversification at very low cost (often under 0.1% per year). Studies consistently show most active managers underperform index funds over time.
Intrinsic Value
Fundamental Analysis
INTERMEDIATE
▼
Intrinsic value is the estimated true worth of a company based on its fundamentals, regardless of its current market price. If the intrinsic value is higher than the share price, the stock may be undervalued. Warren Buffett's entire strategy revolves around buying stocks below intrinsic value.
IOC
Order Types
ADVANCED
▼
IOC (Immediate or Cancel) is an order that executes whatever portion can be filled immediately, and cancels the rest. Unlike FOK, partial fills are acceptable. It's useful when you want to buy quickly but don't want unfilled portions sitting in the market.
IPO
Basics
BEGINNER
▼
An IPO (Initial Public Offering) is when a private company first sells shares to the public on a stock exchange. IPOs generate excitement but can be risky — the share price may surge or fall sharply in the first days of trading. It's often wise to wait for the dust to settle before investing.
ISA
Investing
BEGINNER
▼
An ISA (Individual Savings Account) is a UK tax-free savings and investment wrapper. Stocks and Shares ISAs let you invest up to £20,000 per year with no capital gains tax or income tax on returns. Using your ISA allowance is one of the most tax-efficient ways to invest in the UK.
K
Kelly Criterion
Risk Management
ADVANCED
▼
The Kelly Criterion is a mathematical formula that calculates the optimal percentage of your account to risk on each trade based on your win rate and payoff ratio. While theoretically optimal, most traders use a fraction (quarter or half Kelly) because full Kelly can lead to uncomfortably large drawdowns.
Keltner Channel
Indicators
ADVANCED
▼
Keltner Channels are volatility-based bands using ATR rather than standard deviations (like Bollinger Bands). The middle line is an EMA, with upper and lower bands at a multiple of ATR. When price breaks outside the channel, it signals strong momentum in that direction.
L
Leverage
Risk Management
INTERMEDIATE
▼
Leverage means using borrowed money to increase the size of your trades. 10:1 leverage means you control £10,000 with just £1,000 of your own money. While leverage amplifies profits, it equally amplifies losses — it's the fastest way to blow a trading account.
Limit Order
Order Types
BEGINNER
▼
A limit order is an instruction to buy or sell a stock only at a specific price or better. A buy limit executes at your price or lower; a sell limit at your price or higher. Limit orders give you price control but aren't guaranteed to fill if the price doesn't reach your level.
Liquidity
Basics
BEGINNER
▼
Long
Derivatives
BEGINNER
▼
M
MACD
Indicators
BEGINNER
▼
MACD (Moving Average Convergence Divergence) tracks the relationship between two moving averages of a stock's price. It consists of the MACD line, signal line and histogram. When the MACD line crosses above the signal line, it's a bullish signal; below is bearish.
Margin
Derivatives
INTERMEDIATE
▼
Margin in derivatives trading is the deposit required to open and maintain a leveraged position. Initial margin is what you need to open the trade; maintenance margin is the minimum to keep it open. If your account falls below maintenance margin, you'll face a margin call.
Margin Call
Risk Management
INTERMEDIATE
▼
Market Cap
Basics
BEGINNER
▼
Market capitalisation (market cap) is the total value of a company's outstanding shares, calculated by multiplying the share price by the number of shares. A company trading at £10 with 100 million shares has a market cap of £1 billion. It's the quickest way to gauge a company's size.
Market Cycle
Market Structure
INTERMEDIATE
▼
A market cycle describes the recurring pattern of expansion (bull market), peak, contraction (bear market) and trough in financial markets. Cycles vary in length from a few years to over a decade. Understanding where we are in the cycle helps inform investment strategy.
Market Hours
Market Structure
BEGINNER
▼
Market hours are the times when a stock exchange is open for trading. The LSE trades 8:00 AM to 4:30 PM GMT; NYSE from 2:30 PM to 9:00 PM GMT. Most volume and price movement occurs during regular hours, especially at the open and close.
Market Maker
Basics
BEGINNER
▼
Market Order
Order Types
BEGINNER
▼
A market order is an instruction to buy or sell a stock immediately at the best available price. It guarantees execution but not the exact price — in fast-moving markets, you may pay slightly more or less than expected. Use market orders when speed matters more than price.
Marubozu
Chart Patterns
INTERMEDIATE
▼
A marubozu is a candlestick with a full body and no wicks — the open and close are the high and low. A bullish marubozu (open equals low, close equals high) shows total buyer dominance. It's a strong signal of conviction in the direction.
Max Drawdown
Risk Management
INTERMEDIATE
▼
Maximum drawdown is the largest peak-to-trough decline in your portfolio's history. It represents the worst-case scenario you've experienced. Professional traders aim to keep max drawdown below 20-25% — beyond that, psychological pressure often leads to poor decisions.
Moat
Fundamental Analysis
INTERMEDIATE
▼
An economic moat is a competitive advantage that protects a company from competitors, like a strong brand, patents, network effects or cost advantages. Companies with wide moats (like Apple or Coca-Cola) can sustain high profits over long periods. Warren Buffett popularised the term in investing.
Momentum
Technical Analysis
BEGINNER
▼
Momentum measures the rate at which a stock's price is accelerating or decelerating. Strong momentum means the trend is likely to continue; weakening momentum may signal a reversal. Indicators like RSI and MACD help measure momentum.
Money Flow Index
Indicators
ADVANCED
▼
The Money Flow Index (MFI) is like RSI but incorporates volume, making it a volume-weighted momentum indicator. Readings above 80 indicate overbought; below 20 indicate oversold. MFI divergence from price can be a powerful reversal signal.
Morning Star
Chart Patterns
INTERMEDIATE
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A morning star is a three-candle bullish reversal pattern. The first candle is bearish, the second is a small-bodied candle (indecision), and the third is a strong bullish candle. It signals that selling pressure has exhausted and buyers are taking control.
Moving Average
Indicators
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A moving average smooths out price data to show the trend direction by calculating the average price over a set number of periods. The 50-day and 200-day moving averages are the most widely followed. When a shorter MA crosses above a longer MA (golden cross), it's a bullish signal.
Mutual Fund
Investing
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A mutual fund pools money from many investors to buy a diversified portfolio of stocks, bonds or other assets. Unlike ETFs, mutual funds are priced once daily and traded through the fund company. They can be actively managed (fund manager picks stocks) or passively managed (tracks an index).
N
NASDAQ
Market Structure
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NYSE
Market Structure
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O
OCO
Order Types
INTERMEDIATE
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OCO (One Cancels Other) is a pair of orders where filling one automatically cancels the other. Typically a stop loss and take profit placed simultaneously — when one triggers, the other is cancelled. It's the standard way to manage both upside and downside on an open trade.
On-Balance Volume
Indicators
INTERMEDIATE
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On-Balance Volume (OBV) adds volume on up days and subtracts volume on down days to create a cumulative line. Rising OBV confirms an uptrend; falling OBV confirms a downtrend. When OBV diverges from price, it can signal a pending reversal.
Options
Derivatives
INTERMEDIATE
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Options are contracts that give you the right (but not the obligation) to buy or sell a stock at a set price before a certain date. Call options profit from price increases; put options profit from decreases. Options allow you to leverage small amounts of capital for potentially large returns.
Out of the Money
Derivatives
INTERMEDIATE
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An option is 'out of the money' (OTM) when exercising it would not be profitable. A call is OTM when the stock price is below the strike; a put when above. OTM options are cheaper but have a lower probability of becoming profitable.
Outstanding Shares
Basics
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Outstanding shares are the total number of shares a company has issued that are currently held by all shareholders, including insiders. This number is used to calculate market cap and earnings per share. It differs from float, which only counts publicly tradable shares.
Overbought
Technical Analysis
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A stock is considered overbought when its price has risen too far too fast, suggesting it may be due for a pullback. Technical indicators like RSI above 70 are commonly used to identify overbought conditions. Overbought doesn't mean the price will fall immediately — strong trends can stay overbought for extended periods.
Oversold
Technical Analysis
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A stock is considered oversold when its price has fallen too far too fast, suggesting it may be due for a bounce. RSI below 30 is a common oversold signal. Like overbought conditions, oversold stocks can stay oversold in strong downtrends.
Overvalued
Fundamental Analysis
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A stock is considered overvalued when its price exceeds its estimated fair value based on fundamentals. High P/E ratios, euphoric sentiment and rapid price increases can all indicate overvaluation. An overvalued stock isn't guaranteed to fall — momentum can push prices higher for extended periods.
P
P/E Ratio
Fundamental Analysis
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The Price-to-Earnings (P/E) ratio divides a company's share price by its earnings per share, showing how much investors pay for each pound of profit. A P/E of 15 means you're paying £15 for every £1 of earnings. A high P/E suggests growth expectations; a low P/E may indicate undervaluation or problems.
Parabolic SAR
Indicators
INTERMEDIATE
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The Parabolic SAR (Stop And Reverse) places dots above or below the price to indicate trend direction and potential reversal points. Dots below price are bullish; dots above are bearish. It's particularly useful for trailing stops — as the dots move closer to price, the trend may be weakening.
Passive Investing
Investing
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Passive investing aims to match market returns by tracking an index rather than trying to beat it. It involves buying index funds or ETFs and holding them long-term with minimal trading. Lower fees and less stress make passive investing suitable for most people.
Pennant
Chart Patterns
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A pennant is a small symmetrical triangle that forms after a strong price move, similar to a flag. The converging trendlines show decreasing volatility before the next move. Pennants usually break in the direction of the preceding trend.
Penny Stock
Basics
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A penny stock is a share in a small company that trades at a very low price, typically under £1 or $5. Penny stocks are highly volatile and risky, but can produce large percentage gains. They often have low liquidity and limited public information.
Pivot Points
Indicators
INTERMEDIATE
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Pivot points are calculated support and resistance levels based on the previous day's high, low and close. They're popular among day traders for identifying key price levels. The main pivot point and surrounding support/resistance levels (S1, S2, R1, R2) guide entry and exit decisions.
Portfolio
Basics
BEGINNER
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A portfolio is a collection of investments held by an individual or institution. A well-diversified portfolio might include stocks, bonds, funds and other assets across different sectors and regions. Building and managing a portfolio is central to investing.
Position Size
Risk Management
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Position size is the number of shares or contracts you trade, calculated to control your risk per trade. Most professional traders risk no more than 1-2% of their account on any single trade. Correct position sizing is the difference between surviving a losing streak and blowing your account.
Pound Cost Averaging
Investing
BEGINNER
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Pound cost averaging is the UK equivalent of dollar cost averaging — investing a fixed pound amount at regular intervals. By investing £500 monthly regardless of market conditions, you buy more shares when prices dip and fewer when prices rise. It's one of the simplest and most effective investment strategies.
Pre-Market
Market Structure
INTERMEDIATE
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Pre-market trading occurs before the regular market session, typically from 4:00 AM to 9:30 AM in the US. Prices during pre-market can move significantly on earnings reports and news. Liquidity is lower, so spreads are wider and prices more volatile.
Premium
Derivatives
INTERMEDIATE
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The premium is the price paid to buy an option contract. It represents the maximum loss for the option buyer and the maximum gain for the option seller. Premiums are influenced by the stock price, strike price, time to expiry and implied volatility.
Price Action
Technical Analysis
INTERMEDIATE
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Price action is a trading approach that makes decisions based purely on the stock's price movements, without relying on indicators. Price action traders read candlestick patterns, support and resistance levels, and chart patterns. It's considered the purest form of technical analysis.
Price Target
Fundamental Analysis
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A price target is an analyst's projection of where a stock's price will be in 12 months. If the current price is well below the target, analysts typically rate it a 'buy'. Price targets are estimates, not guarantees, and are regularly revised.
Profit Factor
Risk Management
INTERMEDIATE
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Profit factor is the ratio of total winning trades to total losing trades in monetary terms. A profit factor of 2.0 means you make £2 for every £1 you lose. Anything above 1.0 is profitable; above 1.5 is considered good; above 2.0 is excellent.
Profit Margin
Fundamental Analysis
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Profit margin is the percentage of revenue that becomes profit after all expenses. A company with £100m revenue and £20m profit has a 20% margin. Higher margins indicate better efficiency and pricing power; margins vary widely by industry.
Pullback
Technical Analysis
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A pullback is a temporary decline in price during an overall uptrend. Pullbacks are seen as buying opportunities because the trend remains intact. They differ from reversals, which signal a complete change in trend direction.
Puts
Derivatives
INTERMEDIATE
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A put option gives you the right to sell a stock at a specified price before the expiry date. You buy puts when you expect the price to fall, or to protect a stock you own against losses. Puts act as insurance for your portfolio.
R
Rebalancing
Investing
INTERMEDIATE
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Rebalancing is periodically adjusting your portfolio back to your target asset allocation. If stocks have risen and bonds fallen, you sell some stocks and buy bonds to restore your original percentages. Most investors rebalance annually or when allocations drift more than 5% from targets.
Relative Strength
Technical Analysis
INTERMEDIATE
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Resistance
Technical Analysis
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Revenue
Fundamental Analysis
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Revenue (or turnover) is the total amount of money a company earns from its business activities before any expenses are deducted. It's the 'top line' of the income statement. Growing revenue is essential for long-term business success, but it must translate into profit to create shareholder value.
Reversal
Technical Analysis
INTERMEDIATE
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A reversal is a change in the overall direction of a stock's price — from uptrend to downtrend or vice versa. Reversals are confirmed by chart patterns, volume and indicator signals. Distinguishing between a pullback and a true reversal is one of the hardest skills in trading.
Risk Per Trade
Risk Management
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Risk per trade is the maximum amount you're willing to lose on a single trade, usually expressed as a percentage of your total account. The widely accepted standard is 1-2% per trade. If your account is £10,000 and you risk 1%, your maximum loss per trade is £100.
Risk Tolerance
Risk Management
BEGINNER
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Risk tolerance is the degree of uncertainty in investment returns that you're comfortable with. Aggressive investors accept higher volatility for potentially greater returns; conservative investors prefer stability. Your risk tolerance should guide your asset allocation and position sizing.
Risk-Adjusted Return
Risk Management
INTERMEDIATE
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Risk-adjusted return measures how much return you generate relative to the risk taken. Two traders might both make 20%, but if one risked half as much, their risk-adjusted return is superior. The Sharpe ratio is the most common way to calculate it.
Risk/Reward Ratio
Risk Management
BEGINNER
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The risk/reward ratio compares the potential loss to the potential gain on a trade. A 1:3 ratio means you risk £1 to potentially make £3. As a rule of thumb, only take trades with a risk/reward of 1:2 or better — it means you can be wrong more often than right and still profit.
ROA
Fundamental Analysis
INTERMEDIATE
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Return on Assets (ROA) measures how efficiently a company uses its total assets to generate profit. It's calculated by dividing net income by total assets. ROA is useful for comparing companies within the same industry.
ROE
Fundamental Analysis
INTERMEDIATE
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Return on Equity (ROE) measures how efficiently a company uses shareholders' equity to generate profit. An ROE of 20% means the company generates 20p of profit for every £1 of equity. High ROE is generally good, but very high ROE combined with high debt warrants caution.
RSI (Relative Strength Index)
Indicators
BEGINNER
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RSI is a momentum oscillator that measures the speed and magnitude of price changes on a scale of 0-100. Above 70 suggests overbought conditions; below 30 suggests oversold. RSI divergence — where RSI moves opposite to price — is one of the strongest reversal signals in technical analysis.
S
S&P 500
Market Structure
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Sector
Market Structure
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A sector is a broad category of the economy that groups companies with similar business activities. Common sectors include technology, healthcare, finance, energy and consumer staples. Sector rotation — money moving between sectors — is a key driver of market dynamics.
Sell
Order Types
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A sell order is an instruction to dispose of shares you own. You sell to either take a profit or cut a loss. The difference between your buy price and sell price (minus fees) determines your gain or loss.
Share
Basics
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A share is a single unit of ownership in a company. The terms 'share' and 'stock' are often used interchangeably, though technically a share refers to a specific number of units. If a company has issued 1 million shares and you own 1,000, you own 0.1% of the company.
Sharpe Ratio
Risk Management
INTERMEDIATE
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The Sharpe ratio measures risk-adjusted return by dividing excess return (above the risk-free rate) by volatility. A Sharpe ratio above 1.0 is good; above 2.0 is very good; above 3.0 is excellent. It helps compare strategies that have different levels of risk.
Shooting Star
Chart Patterns
BEGINNER
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A shooting star is a bearish candlestick with a small body at the bottom and a long upper wick. It appears at the top of an uptrend and signals potential reversal. Buyers pushed the price up but sellers overwhelmed them, closing near the low.
Short
Derivatives
INTERMEDIATE
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Going short means selling an asset you don't own (borrowing it first) with the expectation that its price will fall. You profit if the price drops, but face unlimited potential loss if it rises. Short selling can be done directly, through CFDs, or via put options.
Short Sell
Order Types
ADVANCED
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Short selling is borrowing shares and selling them with the aim of buying them back at a lower price for a profit. If you short a stock at £10 and buy it back at £7, you profit £3 per share. Short selling is risky because losses are theoretically unlimited if the price rises.
SIPP
Investing
INTERMEDIATE
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A SIPP (Self-Invested Personal Pension) is a UK pension wrapper that lets you choose your own investments. Contributions receive tax relief (20-45% depending on your tax bracket), and the money grows tax-free. You can't access SIPP funds until age 57 (rising to 58 in 2028).
SMA
Technical Analysis
BEGINNER
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A Simple Moving Average (SMA) calculates the average closing price over a set number of periods, giving equal weight to each. The 50-day and 200-day SMAs are widely watched — a stock above its 200-day SMA is generally considered in an uptrend. Moving average crossovers are popular trading signals.
Sortino Ratio
Risk Management
ADVANCED
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The Sortino ratio is similar to the Sharpe ratio but only penalises downside volatility, not upside. It's a more accurate measure for traders because upside volatility is desirable. A high Sortino ratio indicates strong returns with limited downside risk.
Spinning Top
Chart Patterns
BEGINNER
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A spinning top is a candlestick with a small body and relatively equal upper and lower wicks. Like a doji, it shows indecision in the market. Spinning tops in the middle of a trend suggest the move may be weakening.
Spread
Basics
BEGINNER
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Spread Bet
Derivatives
INTERMEDIATE
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Stochastic Oscillator
Indicators
INTERMEDIATE
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The stochastic oscillator compares a stock's closing price to its price range over a set period, displayed as a value between 0-100. Above 80 is overbought; below 20 is oversold. Like RSI, stochastic crossovers and divergences can signal potential reversals.
Stock
Basics
BEGINNER
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Stop Loss
Order Types
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A stop loss is an order that automatically closes your trade when the price falls to a level you set, limiting your potential loss. For example, if you buy a stock at £10, you might set a stop loss at £9.50 to cap your loss at 5%. Every serious trader uses stop losses — it's the most important risk management tool.
Stop Order
Order Types
BEGINNER
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A stop order (or stop-market order) becomes a market order once the stock reaches a specified trigger price. Buy stops are placed above the current price; sell stops below. They're commonly used to limit losses or enter trades on breakouts.
Strike Price
Derivatives
INTERMEDIATE
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The strike price is the set price at which an option can be exercised — the price you can buy (call) or sell (put) the underlying stock. Options with strike prices near the current market price are 'at the money'. Your profit depends on how far the stock moves beyond the strike price.
Support
Technical Analysis
BEGINNER
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Support is a price level where a stock tends to stop falling because buying demand increases. Think of it as a floor — when the price drops to support, buyers step in. If support breaks, the price may fall further to the next support level.
Swap
Derivatives
ADVANCED
▼
A swap is a derivative contract where two parties exchange financial obligations, most commonly interest rate payments or currency cash flows. Interest rate swaps let companies convert floating-rate debt to fixed-rate. Swaps are used primarily by institutions for risk management.
Symmetrical Triangle
Chart Patterns
BEGINNER
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A symmetrical triangle has converging trendlines with neither slope dominating, showing equal pressure from buyers and sellers. The breakout direction is uncertain, but the resulting move is often significant. Volume typically decreases as the pattern develops.
T
Take Profit
Order Types
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A take profit order automatically closes your trade when the price reaches a target level, locking in your gains. Setting a take profit at £12 on a stock bought at £10 means you'll sell automatically for a 20% gain. Used alongside stop losses to create a defined risk/reward setup.
Theta
Derivatives
ADVANCED
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Ticker Symbol
Basics
BEGINNER
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Timeframe
Technical Analysis
BEGINNER
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A timeframe is the period represented by each candlestick or bar on a chart — from 1-minute to monthly. Day traders use short timeframes (1-min to 15-min), swing traders use daily and weekly charts. The same stock can look bullish on a daily chart and bearish on a 5-minute chart.
Trailing Stop
Order Types
INTERMEDIATE
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A trailing stop is a dynamic stop loss that moves with the price as it goes in your favour. If a stock rises from £10 to £12 with a 5% trailing stop, your stop moves up to £11.40. It locks in profits while allowing the trade to run — the best of both worlds.
Trend
Technical Analysis
BEGINNER
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A trend is the overall direction of a stock's price movement over time. An uptrend has higher highs and higher lows; a downtrend has lower highs and lower lows. The saying 'the trend is your friend' reflects the idea of trading in the direction of the prevailing trend.
Trendline
Technical Analysis
BEGINNER
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A trendline is a straight line drawn on a chart connecting two or more price points to show the direction of the trend. An upward trendline connects higher lows; a downward trendline connects lower highs. A break of a trendline can signal a potential trend reversal.
Triple Bottom
Chart Patterns
INTERMEDIATE
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A triple bottom is a bullish reversal pattern with three roughly equal lows followed by a breakout above resistance. It signals strong buying interest at the support level. Volume typically increases on the breakout, confirming the pattern.
Triple Top
Chart Patterns
INTERMEDIATE
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A triple top is a bearish reversal pattern with three roughly equal peaks followed by a breakdown below support. It's less common than a double top but considered more reliable. The more times price fails at a level, the stronger the resistance.
U
Undervalued
Fundamental Analysis
BEGINNER
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A stock is considered undervalued when its current price is below its estimated intrinsic or fair value. Value investors specifically seek undervalued stocks, believing the market will eventually recognise the true worth. Metrics like P/E ratio, price-to-book and DCF help identify undervaluation.
V
Value Investing
Investing
BEGINNER
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Value investing involves buying stocks that appear underpriced relative to their intrinsic worth. Pioneered by Benjamin Graham and practiced by Warren Buffett, it focuses on fundamentals like P/E ratio, book value and cash flow. Value investors are patient, contrarian and disciplined.
Value Stock
Fundamental Analysis
BEGINNER
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A value stock is a company whose shares trade at a low price relative to its fundamentals — low P/E, low price-to-book or high dividend yield. Value investors believe these stocks are temporarily out of favour and will recover. Value investing requires patience and conviction.
Vega
Derivatives
ADVANCED
▼
Vega measures how much an option's price changes for a 1% change in implied volatility. High vega means the option is very sensitive to volatility changes. Options before earnings reports have high vega because volatility is expected.
Volatility
Basics
BEGINNER
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Volatility measures how much a stock's price moves up and down over time. High volatility means large price swings, which creates both risk and opportunity. Penny stocks and growth stocks tend to be more volatile than blue chips.
Volume
Basics
BEGINNER
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Volume is the total number of shares or contracts traded during a given period, usually a day. High volume means lots of buyers and sellers are active, making it easier to trade. A sudden spike in volume often signals important news or a potential price move.
Volume Profile
Technical Analysis
ADVANCED
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Volume profile shows the amount of trading activity at each price level over a specified period. It helps identify price levels where the most trading has occurred (high volume nodes) and areas with little activity (low volume nodes). These levels often act as support or resistance.
Volume Weighted Moving Average
Indicators
INTERMEDIATE
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The VWMA is a moving average that gives more weight to periods with higher volume. Unlike a standard moving average, VWMA reflects where the most trading activity occurred. When price is above VWMA, it suggests bullish volume-backed strength.
VWAP
Indicators
INTERMEDIATE
▼
VWAP (Volume Weighted Average Price) calculates the average price weighted by volume throughout the trading day. Institutional traders use VWAP as a benchmark — buying below VWAP and selling above it. Day traders treat VWAP as dynamic support and resistance.
W
Wedge
Chart Patterns
INTERMEDIATE
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Williams %R
Indicators
ADVANCED
▼
Williams %R is a momentum oscillator ranging from 0 to -100 that shows where the current close sits relative to the high-low range over a set period. Readings above -20 are overbought; below -80 are oversold. It's essentially an inverted stochastic oscillator.
Win Rate
Risk Management
BEGINNER
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Win rate is the percentage of your trades that are profitable. A trader with 60 winning trades out of 100 has a 60% win rate. Win rate alone doesn't determine profitability — a 40% win rate with a 1:3 risk/reward is more profitable than an 80% win rate with a 3:1 risk/reward.
Working Capital
Fundamental Analysis
INTERMEDIATE
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Working capital is the difference between a company's current assets and current liabilities. Positive working capital means the company can cover its short-term obligations. Negative working capital can be a warning sign, though some businesses (like supermarkets) operate successfully with negative working capital.
Y
Yield
Basics
BEGINNER
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Yield is the income return on an investment, expressed as a percentage. For stocks, dividend yield is the annual dividend divided by the share price. A stock paying 50p annual dividend at a £10 share price has a 5% yield.
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