Glossary · 25 terms
Stock Market Basics
All stock market basics terms in the EquitiesAmerica.com glossary — plain-English definitions for American investors.
After-Hours Trading(extended-hours trading)
After-hours trading refers to the buying and selling of securities on U.S. markets outside of regular stock exchange trading hours (9:30 a.m. to 4:00 p.m. Eastern Time), encompassing both pre-market sessions (typically 4:00 a.m. to 9:30 a.m. ET) and after-market sessions (4:00 p.m. to 8:00 p.m. ET) via electronic communication networks (ECNs). It offers extended access but comes with reduced liquidity and wider bid-ask spreads.
Bear Market(bearish market)
A bear market is a sustained decline in stock prices of 20% or more from recent highs in a broad index such as the S&P 500, typically accompanied by widespread pessimism, declining economic activity, and reduced investor risk appetite. Bear markets are the counterpart to bull markets in the cycle of U.S. equity markets.
Bid-Ask Spread(spread)
The bid-ask spread is the difference between the highest price a buyer is willing to pay for a security (the bid) and the lowest price a seller is willing to accept (the ask or offer), representing the implicit cost of transacting in a security and the primary source of compensation for market makers. A narrower spread indicates greater liquidity.
Blue Chip Stock(blue-chip)
A blue chip stock is a share in a large, nationally recognized, financially stable, and well-established corporation with a long track record of consistent performance and often a history of paying dividends through various economic cycles. The term originates from poker, where blue chips traditionally carry the highest value.
Bull Market(bullish market)
A bull market is a sustained period during which stock prices are rising or are expected to rise, commonly defined as a gain of 20% or more from a recent low in a broad market index such as the S&P 500. Bull markets are typically accompanied by strong economic growth, low unemployment, and high investor confidence.
Circuit Breaker(trading halt)
A circuit breaker is a regulatory mechanism that temporarily halts trading on U.S. stock exchanges when prices decline sharply within a single session, designed to prevent panic-driven market freefall and allow time for information to be absorbed and rational pricing to reassert itself. Market-wide circuit breakers in the U.S. are triggered based on percentage declines in the S&P 500.
Dividend(cash dividend)
A dividend is a distribution of a portion of a company's earnings to its shareholders, typically paid in cash on a per-share basis at regular intervals (quarterly in most U.S. companies) as authorized by the company's board of directors. Dividends represent one of the two primary ways equity investors receive returns, the other being capital appreciation.
Dow Jones Industrial Average(DJIA)
The Dow Jones Industrial Average (DJIA) is a price-weighted index tracking 30 large, blue-chip U.S. companies listed on the NYSE and NASDAQ, serving as one of the oldest and most widely recognized indicators of U.S. stock market performance. It was created by Charles Dow and Edward Jones in 1896.
Equity(stockholders' equity)
Equity refers to the ownership interest in a company represented by stock, calculated as the company's total assets minus its total liabilities. In corporate finance and investing, equity is a fundamental concept that underpins how ownership, value, and returns are measured.
Float(public float)
Float (or public float) refers to the number of a company's shares that are freely available for trading by the general public, excluding shares held by company insiders, major institutional shareholders subject to lock-up agreements, and shares held in employee stock option plans. Float is a more practical measure of trading liquidity than total shares outstanding.
IPO(Initial Public Offering)
An Initial Public Offering (IPO) is the process by which a private company offers its shares to the general public on a stock exchange for the first time, transitioning from private to public ownership and allowing it to raise capital from public investors. In the United States, IPOs are regulated by the SEC under the Securities Act of 1933.
Limit Order(limit buy order)
A limit order is an instruction to execute a securities transaction at a specified price or better — a maximum price for a purchase order, or a minimum price for a disposition order — providing price certainty at the cost of execution certainty. Limit orders are a fundamental order type at all U.S. brokerages and exchanges.
Market Capitalization(market cap)
Market capitalization (market cap) is the total market value of a publicly traded company's outstanding shares, calculated by multiplying the current share price by the total number of shares outstanding. It is the most widely used measure of a company's size in financial markets.
Market Order(market buy order)
A market order is an instruction to purchase or liquidate a security immediately at the best available current price in the market, prioritizing speed of execution over price certainty. Market orders are the most basic order type offered by U.S. brokerages and are guaranteed to execute (assuming sufficient liquidity) but not at a specific price.
NASDAQ(National Association of Securities Dealers Automated Quotations)
NASDAQ (National Association of Securities Dealers Automated Quotations) is the second-largest U.S. stock exchange by market capitalization and the world's first fully electronic stock market, known for listing many of America's leading technology companies. It operates as an electronic communication network rather than a physical trading floor.
NASDAQ Composite(COMP)
The NASDAQ Composite is a market-capitalization-weighted index that tracks more than 3,000 companies listed on the NASDAQ stock exchange, making it one of the broadest U.S. equity benchmarks and a widely used gauge of the technology and growth sector. It is heavily weighted toward technology, consumer discretionary, and healthcare companies.
NYSE(New York Stock Exchange)
The New York Stock Exchange (NYSE) is the world's largest stock exchange by market capitalization, located on Wall Street in New York City, where shares of thousands of U.S. and international corporations are listed and traded. Founded in 1792, the NYSE is operated by Intercontinental Exchange (ICE) and is regulated by the SEC.
Outstanding Shares(shares outstanding)
Outstanding shares (or shares outstanding) refers to all shares of a company's stock that have been issued and are currently held by shareholders — including institutional investors, retail investors, and company insiders — but excluding treasury shares that have been repurchased and are held by the company itself. Outstanding shares form the basis for calculating key metrics including market capitalization and earnings per share.
Penny Stock(micro-cap stock)
A penny stock is a stock that trades at a low price, typically below $5 per share according to the SEC's definition, and is usually issued by a small company with limited operating history, low market capitalization, and minimal regulatory reporting requirements. Penny stocks in the U.S. often trade on OTC (over-the-counter) markets rather than on major exchanges like the NYSE or NASDAQ.
S&P 500(S&P)
The S&P 500 (Standard & Poor's 500) is a market-capitalization-weighted index that tracks the performance of 500 of the largest publicly traded companies listed on U.S. stock exchanges, widely regarded as the most representative benchmark of the overall U.S. equity market. It is maintained by S&P Dow Jones Indices.
Share(unit of stock)
A share is a single unit of ownership in a company or financial asset, representing the smallest denomination into which a company's stock is divided. Owning shares entitles the holder to a proportional claim on the company's profits and assets.
Stock(equity)
A stock is a financial instrument that represents a unit of ownership in a corporation, entitling the holder to a proportional claim on the company's assets and earnings. In the United States, stocks are bought and sold on regulated exchanges such as the NYSE and NASDAQ.
Stock Split(share split)
A stock split is a corporate action in which a company increases its total number of outstanding shares by issuing additional shares to existing shareholders in proportion to their holdings, reducing the price per share by the same ratio without changing the company's total market capitalization. The most common split ratios in U.S. markets are 2-for-1 and 3-for-1.
Ticker Symbol(stock ticker)
A ticker symbol (or stock ticker) is an abbreviation of letters (and sometimes numbers) used to uniquely identify a publicly traded security on a stock exchange. In the United States, NYSE-listed companies typically use one-to-three-letter symbols, while NASDAQ-listed companies typically use four or five letters.
Volume(trading volume)
Volume in stock market context refers to the total number of shares of a security that are traded during a given time period, typically a single trading day. It is one of the most closely watched data points in financial markets, used by traders and analysts to gauge the strength of price movements and market interest in a particular security.