Finance and Market Basics

stock

ownership share in company

exchange

marketplace where securities trade

bid

highest price buyer is willing to pay

ask

lowest price seller is willing to accept

spread

difference between ask and bid

limit order

order to buy or sell at specified price or better

market order

order to buy or sell immediately at best available price

order book

list of open buy and sell orders

price time priority

better price first then earlier time

trade execution

matching buy and sell orders

liquidity

ability to trade without large price movement

volatility

degree of price variation

latency

time delay in receiving or acting on information

market maker

participant providing buy and sell quotes

arbitrage

profit from price difference between markets

slippage

difference between expected and actual execution price

backtest

test strategy on historical data

risk

possibility of loss

PnL

profit and loss