The stock market has its own language. This glossary explains the 50 most important terms in simple words.

A

Asset Allocation: Distributing your wealth across different asset classes.

ATR: Average True Range — measures average daily price range.

B

Bear Market: A market that has fallen at least 20% from its high.

Benchmark: Comparison standard — e.g., MSCI World as benchmark for your portfolio.

Bollinger Bands: Technical indicator measuring volatility.

Bull Market: A rising market with at least 20% gain from its low.

Compound Interest: Interest on interest — the most powerful force in wealth building.

Diversification: Risk spreading through different investments.

Dividend: Company profit distribution to shareholders.

Drawdown: Percentage decline from portfolio peak.

EPS: Earnings Per Share.

ETF: Exchange Traded Fund tracking an index.

FIRE: Financial Independence Retire Early.

Gap: Price gap when market jumps overnight.

Hedging: Protecting a position against losses.

IPO: Initial Public Offering.

Leverage: Trading with borrowed money — multiplies gains AND losses.

Limit Order: Buy/sell only at a specific price.

Long: Betting on rising prices (buying).

MACD: Technical indicator for trend strength.

Market Order: Immediate buy/sell at best available price.

Momentum: The tendency of rising stocks to keep rising.

Portfolio: The totality of your investments.

Rebalancing: Regular adjustment of portfolio weighting.

Return: Your profit in percent.

Risk Management: Strategies for loss limitation.

RSI: Relative Strength Index.

S&P 500: Index of 500 largest US companies.

Sharpe Ratio: Return relative to risk.

Short: Betting on falling prices.

Spread: Difference between bid and ask price.

Stop-Loss: Automatic sale when loss limit is reached.

TER: Annual cost of an ETF.

VIX: Volatility index — Wall Streets fear gauge.

Volume: Number of shares traded.

Bookmark this glossary — you will need it regularly in the first months.