Stock Market Terminology: 50 Key Terms
2024-04-11·12 min read·By StockifyX Glossary
Essential Terms Every Investor Should Know
Markets have their own language. Understanding the key terms removes confusion and helps you evaluate information objectively rather than reacting to noise.
Price and Valuation Terms
- P/E Ratio: Price divided by earnings per share. Tells you how much you pay per dollar of profit. High P/E = high growth expectations.
- EPS: Earnings per share. Company net income divided by shares outstanding.
- Market Cap: Share price × shares outstanding. Small-cap under $2B, mid-cap $2–10B, large-cap over $10B.
- P/B Ratio: Price to book value. Useful for banks and asset-heavy businesses.
- Dividend Yield: Annual dividend divided by share price. A 3% yield means $3 paid per $100 invested.
Market Condition Terms
- Bull Market: A rise of 20% or more from a recent low. Characterized by broad optimism and rising prices.
- Bear Market: A decline of 20% or more from a recent high. Can last months to years.
- Correction: A 10–20% pullback from a recent high. Common and normal even in bull markets.
- Volatility: The degree of price variation. High volatility = large swings up and down.
Order Types
- Market Order: Execute immediately at the current price. Use for highly liquid stocks.
- Limit Order: Execute only at your specified price or better. Protects against bad fills.
- Stop-Loss: Triggers a sell if price falls to your specified level. Essential for risk management.