A

Annual Report

A yearly document published by a company that shows how much money it made, how it spent it, and what it plans to do next.

Ask Price

The lowest price a seller is willing to accept for a share right now.

Asset

Anything you own that has financial value, such as cash, shares, property, or bonds.

Asset Allocation

How you split your money across different types of investments like shares, bonds, and cash to balance risk and reward.

B

Bear Market

A period when stock prices fall by 20% or more from their recent high, and investors generally feel pessimistic.

Beta

A number that shows how much a share's price tends to move compared to the overall market - above 1 means more volatile, below 1 means calmer.

Bid Price

The highest price a buyer is willing to pay for a share right now.

Blue Chip

A large, well-established company with a strong reputation that has been around for many years and is considered a relatively safe investment.

Bond

A loan you give to a company or government in exchange for regular interest payments and your money back on a set date.

Book Value

What a company would be worth if it sold everything it owns and paid off all its debts - essentially its net assets.

Broker

A company or app that lets you buy and sell shares, acting as the middleman between you and the stock exchange.

Bull Market

A period when stock prices are rising steadily and investors generally feel optimistic about the future.

Buy and Hold

An investing strategy where you buy shares and keep them for many years, ignoring short-term ups and downs.

C

Call Option

A contract that gives you the right (but not the obligation) to buy a share at a set price before a specific date.

Capital Gain

The profit you make when you sell an investment for more than you paid for it.

CFD

A contract for difference lets you bet on whether a share price will go up or down without actually owning the share itself.

Compound Interest

When you earn interest on your original money plus all the interest you have already earned - making your money grow faster over time.

Cash Dividend

A dividend paid directly into your account as cash, rather than as additional shares.

D

Day Trading

Buying and selling shares within the same day to try to profit from small price movements, rather than holding long-term.

Diversification

Spreading your money across many different investments so that if one does badly, the others can make up for it.

Dividend

A payment a company makes to its shareholders out of its profits, usually paid every three months or twice a year.

Dividend Yield

The annual dividend payment shown as a percentage of the share price, so you can compare how much income different shares pay.

Dollar-Cost Averaging

Investing a fixed amount of money at regular intervals regardless of whether prices are high or low, which smooths out your average buying price over time.

E

Earnings

The profit a company makes after paying all its costs, taxes, and expenses - also called net income.

Earnings Per Share (EPS)

A company's total profit divided by the number of shares it has, showing how much profit each share is responsible for.

ETF (Exchange-Traded Fund)

A basket of many shares bundled into one investment that you can buy and sell on the stock exchange just like a single share.

Ex-Dividend Date

The cut-off date by which you must own a share to receive the next dividend payment - buy after this date and you miss it.

F

Fundamental Analysis

Studying a company's financial health, earnings, and growth prospects to work out whether its shares are good value.

FTSE 100

An index that tracks the 100 largest companies listed on the London Stock Exchange, used as a measure of how the UK stock market is doing.

Futures

A contract that locks in the price you will buy or sell something at on a specific future date, originally used by farmers to guarantee crop prices.

G

Growth Stock

Shares in a company that is growing its revenue and profits quickly and is expected to keep growing faster than average.

H

Hedge

An investment you make specifically to reduce the risk of losses on another investment, like an insurance policy for your portfolio.

I

IPO (Initial Public Offering)

When a private company sells shares to the public for the first time, allowing anyone to buy a piece of it on the stock exchange.

Index

A list of selected shares used to measure how a particular stock market or sector is performing overall.

Index Fund

A fund that automatically buys all the shares in a particular index, giving you broad market exposure with very low fees.

Inflation

When prices of everyday things go up over time, meaning your money buys less than it used to.

Interest Rate

The percentage charged for borrowing money, or the percentage earned on savings - set largely by the Bank of England in the UK.

Investment Trust

A company listed on the stock exchange whose entire business is investing in other companies or assets on behalf of its shareholders.

ISA (Individual Savings Account)

A special UK account where any profits, dividends, or interest you earn are completely tax-free, up to a yearly allowance.

J

Junk Bond

A bond issued by a company or government with a higher risk of not paying you back, which is why they offer higher interest rates to tempt investors.

L

Large-Cap

A company worth more than about £10 billion in total market value - these are usually well-known, stable businesses.

Leverage

Using borrowed money to invest, which amplifies both your potential gains and your potential losses.

Limit Order

An instruction to buy or sell a share only if the price reaches a specific level you set, giving you more control over the price you pay.

Liquidity

How quickly and easily you can buy or sell an investment without significantly affecting its price.

Long Position

When you buy a share expecting its price to go up - the most common way people invest.

M

Margin

The deposit you put down when borrowing money from your broker to buy more shares than you could afford with your own cash alone.

Market Cap

The total value of all a company's shares added together - calculated by multiplying the share price by the number of shares.

Market Maker

A firm that always stands ready to buy or sell a particular share, making sure there is always someone on the other side of your trade.

Market Order

An instruction to buy or sell a share immediately at whatever the current best available price is.

Mid-Cap

A company worth roughly between £2 billion and £10 billion - bigger than startups but smaller than the giants.

Mutual Fund

A pool of money from many investors managed by a professional fund manager who picks which shares or bonds to buy.

N

NASDAQ

An American stock exchange known for listing technology companies like Apple, Microsoft, Amazon, and Google.

Net Worth

Everything you own (assets) minus everything you owe (debts) - the total value of your financial position.

NYSE (New York Stock Exchange)

The largest stock exchange in the world by total value of listed companies, located on Wall Street in New York.

O

Option

A contract that gives you the right to buy or sell a share at a set price before a deadline, without forcing you to do so.

Order Book

A live list showing all the buy orders and sell orders waiting to be filled for a particular share, and at what prices.

OTC (Over-the-Counter)

Trading that happens directly between two parties rather than on a public stock exchange, often for smaller or more unusual investments.

P

P/E Ratio (Price-to-Earnings)

The share price divided by the company's earnings per share - it tells you how many years of current profits you are paying for.

Penny Stock

Shares in very small companies that trade for a very low price, often just a few pence - they can be exciting but are extremely risky.

Portfolio

All of your investments grouped together - your collection of shares, bonds, funds, and any other assets you own.

Position

A specific investment you currently hold - for example, your holding in one particular company's shares.

Preference Share

A type of share that pays a fixed dividend before ordinary shareholders get theirs, but usually does not come with voting rights.

Premium

The price you pay upfront to buy an option contract - this is the most you can lose if the trade does not work out.

Price-to-Book Ratio

The share price divided by the book value per share - it shows whether you are paying more or less than what the company's assets are actually worth.

Put Option

A contract that gives you the right to sell a share at a set price before a deadline - useful if you think the price is going to fall.

Q

Quote

The current price information for a share, typically showing the latest bid price, ask price, and last traded price.

R

Rebalancing

Adjusting your portfolio back to your target mix by selling investments that have grown too large and buying ones that have shrunk.

Recession

When a country's economy shrinks for two consecutive quarters (six months), usually meaning fewer jobs, lower spending, and falling company profits.

REIT (Real Estate Investment Trust)

A company that owns and operates property (like offices, shops, or warehouses) and is required to pay out most of its rental income as dividends.

Resistance

A price level that a share has struggled to rise above in the past, because sellers tend to appear at that price.

Return

The total money you make (or lose) on an investment, usually shown as a percentage of what you originally put in.

Reverse Stock Split

When a company reduces the number of its shares and increases the price proportionally - the opposite of a stock split.

Risk Tolerance

How much loss or volatility you are comfortable handling without panicking and selling - it varies from person to person.

Rights Issue

When a company offers its existing shareholders the chance to buy new shares at a discount before offering them to anyone else.

S

S&P 500

An index tracking the 500 largest companies in the United States, widely considered the best single measure of the US stock market.

Sector

A group of companies that operate in the same industry, such as technology, healthcare, energy, or financial services.

SIPP (Self-Invested Personal Pension)

A pension where you choose your own investments and get tax relief on contributions - the government tops up what you put in.

Share

A tiny piece of ownership in a company - if you own one share, you own a fraction of that business.

Short Selling

Borrowing shares and selling them immediately, hoping to buy them back later at a lower price and keep the difference as profit.

Slippage

The difference between the price you expected to get and the price you actually got when your order was filled.

Small-Cap

A company worth less than about £2 billion in total market value - often younger businesses with more growth potential but also more risk.

Spread

The gap between the bid price (what buyers offer) and the ask price (what sellers want) - it is the hidden cost of every trade.

Stamp Duty (on shares)

A UK tax of 0.5% that you pay every time you buy shares listed on a UK stock exchange - there is no stamp duty when you sell.

Stock

Another word for shares - owning stock in a company means you own a piece of it.

Stock Exchange

A marketplace where shares are bought and sold - like an auction house but for pieces of companies.

Stock Split

When a company divides each existing share into multiple shares, lowering the price per share but not changing the total value you own.

Stop-Loss Order

An automatic instruction to sell a share if its price drops to a certain level, designed to limit how much you can lose.

Strike Price

The fixed price at which an option contract allows you to buy or sell the underlying share.

Support

A price level that a share has struggled to fall below in the past, because buyers tend to appear at that price.

Swing Trading

Holding shares for a few days to a few weeks to profit from short-term price swings, rather than day trading or long-term investing.

T

Technical Analysis

Studying price charts and patterns to predict where a share price might go next, based on what it has done in the past.

Ticker Symbol

A short code of letters used to identify a company on the stock exchange, like a nickname for the share.

Total Return

The full amount you have made from an investment including both the price increase and any dividends or interest received.

Trading Volume

The total number of shares bought and sold in a given time period - high volume means lots of activity and interest.

Treasury Bond

A bond issued by a government (like the UK or US government), considered one of the safest investments because governments rarely fail to pay back their debts.

Trend

The general direction a share price is moving over time - either upward (bullish), downward (bearish), or sideways.

U

Underwriter

A bank or financial firm that helps a company sell its shares to the public during an IPO, often guaranteeing to buy any unsold shares.

V

Value Stock

Shares in a company that appears to be trading for less than it is actually worth, often with a low P/E ratio and steady dividends.

Volatility

How much and how quickly a share price moves up and down - high volatility means big, unpredictable swings.

VWAP (Volume Weighted Average Price)

The average price a share has traded at during the day, weighted by how many shares traded at each price level.

Y

Yield

The income you earn from an investment shown as a percentage of its price - like an interest rate for your investment.

Yield Curve

A chart showing what interest rate government bonds pay at different lengths of time - normally longer bonds pay more, but sometimes it flips.