Trading Glossary: Essential Terms for Stocks, ETFs, Bonds, and Technical Analysis

Infos | Free publication | 1 Dec 2025

1. Financial Products and Instruments

Stock: Title to ownership of a fraction of a company. Shareholders benefit from capital gains and dividends.
Bond: Debt security issued by a company or government. The investor lends money and receives periodic interest payments, plus the return of the principal at maturity.
ETF (Exchange-Traded Fund): A fund that tracks an index, sector, commodity, or asset and is traded on an exchange like a stock.
Futures: A standardized contract to buy or sell an asset at a predetermined price and date in the future. Used for hedging or speculation.
Option: A contract giving the holder the right, but not the obligation, to buy (call) or sell (put) an asset at a specific price on or before a certain date.
CFD (Contract For Difference): A derivative product that allows traders to speculate on the price movement of an asset without owning it.

Bear Market: A market characterized by prolonged price declines, typically a drop of 20% or more from recent highs.
Bull Market: A market characterized by prolonged price increases.
Volatility: A measure of the rate and magnitude of price fluctuations for a given asset. High volatility indicates higher risk.
Liquidity: The ease with which an asset can be bought or sold without significantly affecting its price.
Spread: The difference between the bid (sell) price and the ask (buy) price of an asset.
Stock Index: A basket of stocks representing a market or sector (e.g., S&P 500, CAC 40). Used as a performance benchmark.

Dividend: A portion of a company's earnings distributed to shareholders, usually in cash or additional shares.
Stop-Loss: An automatic order to sell an asset when its price reaches a certain level, to limit losses.
Take-Profit: An automatic order to sell an asset when its price reaches a certain profit level.
Leverage: A technique to amplify exposure to an asset by borrowing funds. Increases potential gains and risks.
Short Selling: Borrowing an asset to sell it, with the expectation of buying it back at a lower price to profit from the difference.
Diversification: Spreading investments across different assets to reduce overall portfolio risk.

Technical Analysis: The study of price charts and indicators (e.g., moving averages, RSI, MACD) to predict future price movements.
Fundamental Analysis: Evaluating an asset's intrinsic value by analyzing economic, financial, and industry data (e.g., balance sheets, growth rates, interest rates).
Support: A price level where demand is strong enough to prevent further price declines.
Resistance: A price level where supply is strong enough to prevent further price increases.
Moving Average: An indicator that smooths price data to identify trends over a specific period.

Pip: (Percentage In Point) The smallest price movement in the foreign exchange market.
Lot: A standardized unit of transaction size in the forex market (e.g., 1 lot = 100,000 units of the base currency).
IPO (Initial Public Offering): The first sale of a company's shares to the public.
Market Cap: The total value of a company's outstanding shares, calculated as the share price multiplied by the number of shares.