Trading Terminology for Beginners

Fill-in-the-blank practice flashcards for trading terminology covered in the document.

A comprehensive report filed annually by a publicly traded company about its financial performance required by the SEC is a __________.

10-K

Purchasing over __________ of available shares and assets allows an acquirer to make decisions about newly purchased assets without requiring approval from other shareholders.

50%

After-Hours trading starts at __________ EST after the market closes and can run until as late as 8:00pm.

4pm

The Alternative Investment Market (AIM) was established in 1995 by the __________ as a way for new firms to gain access to public funds.

London Stock Exchange

Created in the 1960s by Edward Altman, the __________ indicates the probability of a company entering bankruptcy within the next two years.

Altman Z-Score

An __________ enables US investors to access ownership of foreign public companies.

American Depositary Receipt (ADR)

The two meanings of __________ are reducing the value of assets to reflect their value over time and servicing debt in regular increments.

Amortisation

A document that public companies must provide to shareholders annually describing their operations and financial conditions is an __________.

Annual Report

An annuity is a product that can provide a lifetime income upon retirement to hedge against __________ risk.

longevity

An alpha of 1% means that the return on investment was 1% better than the __________.

benchmark index

Taking advantage of price differences in substantially identical assets across different markets or instruments is known as __________.

Arbitrage

Assets are resources with economic value owned or controlled with the expectation of future benefit and are reported on a company's __________.

balance sheet

An independent person required by law to sign off that a firm's financial statements are true and fair is an __________.

Auditor

Companies occasionally hand cash back to shareholders by issuing new types of shares under a __________ scheme.

B/C Share

When the current cash price for an asset slips above the price for forward delivery, the condition is known as __________.

Backwardation

The accounts that sum up a country's financial position relative to other countries are called the __________.

Balance of Payments

A balance sheet reports a company's assets, liabilities, and __________ at a specific point in time.

shareholders' equity

Pessimistic investors who attempt to profit from falling stock prices by borrowing and selling shares are called __________.

Bears

The relative risk of a share is measured using __________.

Beta

The difference between the price at which you can buy a share and the price at which it can be sold is the __________.

Bid-Offer Spread

For bonds, the interest paid to investors who purchase them is known as a __________.

coupon

A practice common among British companies where free additional shares are added to existing shareholders' positions is a __________.

Bonus Issue

The price an asset must hit in order to enable an option buyer to recover their premium is called the __________.

Breakeven

An investor who purchases shares under the assumption that they can sell them later for a higher price is described as __________.

Bullish

Financial contracts that allow the holder to buy an asset at a stated price within a specific timeframe are called __________.

Call Options

Candlesticks originally formed from __________ and traders to track market prices and daily momentum.

Japanese rice merchants

Capital gains are considered to be realized once the asset is __________.

sold

The net amount of cash and cash-equivalents being transferred into and out of a business is known as __________.

Cash flow

Aggregate data regarding all cash inflows and outflows of a company throughout a specific period is provided on the __________.

Cash Flow Statement

Humans use mental shortcuts known as __________ to make quick decisions, which can handicap investing.

heuristics

Basic goods used in commerce that are interchangeable with other goods of the same type are called __________.

Commodities

Non-standardised agreements between two parties concerning future delivery of a commodity for a set price are called __________.

Commodity Forwards

Market indecisiveness during consolidation ends when an asset's price breaks either __________.

resistance or support

In finance, non-linearities in a potential output after adjusting an input variable is known as __________.

Convexity

In trading correlation, a value of __________ represents a negative correlation between two variables.

-1

Companies engaging in cross-border operations are most exposed to __________ due to exchange rate fluctuations.

Currency Risk

A day trader will typically not have any open positions after the __________.

market closes

Stocks based on underlying assets that tend to be less prone to economic cycles are called __________.

Defensive Stocks

Deflation occurs when nominal prices drop, which directly boosts consumer __________.

purchasing power

If a stock option has a delta value of 0.65, a $1 per share increase in the stock price causes the option to rise by __________ per share.

$0.65

The accounting practice of spreading out the cost of a fixed asset over time and deducting it from taxable income is __________.

Depreciation

Financial instruments whose prices derive from or depend on the performance of underlying assets are collectively called __________.

Derivatives

An investment strategy focused on risk mitigation by creating a portfolio containing a variety of investments is __________.

Diversification

Developed in the 1930s by Ralph Nelson Elliot, the __________ uses fractal and repetitive patterns to predict future market movements.

Elliot Wave Theory (EWT)

Representing the amount returned to shareholders if all assets are liquidated and debt paid off, equity can be found on a company's __________.

balance sheet

Baskets of securities that track an underlying index and act like marketable securities are called __________.

Exchange-Traded Funds (ETF)

A contingency plan executed by traders to liquidate a position once predetermined criteria have been met is an __________.

Exit Strategy

An __________ places a greater weight and significance on the most recent data points compared to a simple moving average.

Exponential Moving Average (EMA)

Tradeable assets or packages of capital that provide efficient transfer of capital globally are __________.

Financial Instruments

A company's float does not include __________ shares, which are on a sale restriction and may be owned by company insiders.

restricted

Foreign currency funds and foreign assets held by a country's central bank are called __________.

Foreign Exchange Reserves (FER)

Researching a company's revenue reports, data, and headlines to make an educated trade decision is called __________.

Fundamental investing

Derivative contracts that obligate parties to transact an asset at a predetermined future date and price are __________.

Futures

Areas on a chart where the price of a stock moves sharply up or down with little to no trading in between are called __________.

Gaps

An investment made with the intention of reducing the risk of adverse price movements by taking an offsetting position is a __________.

Hedge

An Income Statement is also known as a __________ statement.

profit and loss

A hypothetical basket of securities providing a relevant snapshot of a given market is an __________.

Index

An account that allows individuals to save and invest without paying income tax or capital gains is an __________.

Individual Savings Account (ISA)

The Information Ratio measures the risk-adjusted return of a portfolio and is sometimes referred to as the __________ ratio.

appraisal

An interest rate represents the amount of interest due per period and generally takes the form of an __________ percentage.

annual

Using borrowed capital as a funding source to increase the potential return of an investment is known as __________.

Leverage

Debts owed by a person or company that are settled over time via transfer of economic benefits are __________.

Liabilities

The ease with which an asset can be converted into ready cash without affecting its market price is __________.

Liquidity

A strategy looking to capitalise on a stock's momentum to enter a trend as it picks up movement is __________.

Momentum Trading

Calculating a __________ helps mitigate the impacts of random, short-term price fluctuations.

Moving Average (MA)

Unlike futures, holders of __________ are not required to buy or sell the underlying asset if they choose not to.

Options

A simulated trade that allows new investors to practice strategies without risking real money is __________.

Paper Trading

Pattern day traders using FINRA-regulated brokers are required to hold $__________ in their margin accounts to bypass the PDT rule.

25,000

The pre-market trading session occurs between 8:00am and __________ EST each trading day.

9:30am

Identifying potential stocks of interest prior to market open with the help of a screener is called __________.

Pre-market scanning

In options trading, the total cost to buy an option is called the __________.

Premium

The ratio of a company's share price relative to its earnings per share is called the __________.

Price Earnings Ratio (P/E Ratio)

Financial contracts that allow the holder to sell an asset at a stated price within a specific timeframe are __________.

Put Options

The resistance line can be charted by drawing a line along the __________ for a specific time period.

highest highs

An options strategy designed to hedge directional strategies is called a __________.

Risk Reversal

A trading strategy geared towards profiting from minor price changes by making many trades in a day is __________.

Scalping

Public companies in the U.S. must submit a comprehensive quarterly report to the SEC using SEC Form __________.

10-Q

Negotiable financial instruments holding monetary value, such as stocks, are called __________.

Securities

A person or company that owns at least one share of a company's stock is a __________.

Shareholder

The ratio used to determine how much return is achieved per unit of risk is the __________.

Sharpe Ratio

Units of stock representing a fraction of ownership in a corporation are called __________.

shares

A set of tools enabling investors to quickly gather information about a range of stocks based on specific criteria is a __________.

Stock Screener

An explosion in stock price that creates opportunities to buy on the way up and short on the way down is a __________ pattern.

Supernova

The support line can be identified by drawing a line underneath the __________ for a specific timeframe.

lowest lows

A style of trading that attempts to capture short-term to medium-term gains over a period of a few days to several weeks is __________.

Swing Trading

Focusing on understanding trends, price movement, and volume using charting tools and indicators is called __________.

Technical Analysis

Day traders typically use smaller time frames such as 1min and __________ to determine market trends.

5min

The Treynor ratio, which quantifies return per unit of risk, is also known as the __________ ratio.

reward-to-volatility

A stock or bond on which derivative instruments like futures or options are based is called an __________.

Underlying Security

The amount of an asset or security that changes hands between buyers and sellers over a period of time is __________.

Volume