Financial Terms Glossary

Oct 27, 2020

Here is a list of financial terms you may come across in TradeSmith.

 

% Off High The percentage amount that the latest close is below the highest close achieved by the symbol since the entry date. This can be impacted by dividends.
1 Year Change % The change in market price over one year.
3 Year Change % The change in market price over three years.
5 Year Change % The change in market price over five years.
52 Week High The high price that the stock traded for in the previous year.
Amount The number of units of a cryptocurrency sent in a transaction. This can also be known as “units.”
Amplitude Amplitude is the difference in a security’s price from its wave cycle trough (bottom) to the crest (top) of its price movement over a period of time.
Annualized Gain The percentage gain that the position would achieve in one year if it continues its current trend.
ASIC Mining ASIC is a way to mine cryptocurrencies faster. A faster hashrate means a better chance for a miner’s transaction to be approved and for them to win the reward. ASIC, Application Specific Integrated Circuit, is a computer chip created to solve a specific problem. The ASIC chip is used to solve the cryptography function much faster than a standard computer or laptop could.
Bear Market A period of time when the stock market is trending down, and the majority of stocks are going down in price. One criterion for a major bear market is when the three major stock indexes (the Dow Jones Industrial Average, S&P 500, and NASDAQ 100) have corrected 20% or more from their highest recent levels. This is the opposite of a bull market.
Bitcoin Address A Bitcoin address is a unique identifier that serves as a virtual location where the cryptocurrency can be sent. This is not the same as a Public Key.
Bitcoin Cash An alternative version of Bitcoin that uses new features, rules, and a different developmental roadmap. Increases the size of blocks, allowing more transactions to be processed.
Bit(s) A fractional amount of a Bitcoin.
Block Height This tells you where the block is in the blockchain. Higher blocks are more recent.
Block Limit The number of transactions that can be processed on the distributed ledger per day. For example, this amounts to 1Mega Byte, or 250,000 transactions, for Bitcoin.
Block Reward The amount of Bitcoin (or other cryptocurrency) that a miner receives for processing a transaction. The reward is a total of block subsidy and transaction fees.
Blockchain The general ledger for cryptocurrency transactions. The open-source document allows anyone to read it. Miners will confirm transactions in the blockchain. Once the nodes agree that the block is correct, it will be added to the chain so the next transaction can be processed.
Blue Chip Stocks These are often large-cap stocks in companies known for their long-established record of making money and paying dividends.
Bull Market A period of time when the stock market is trending up and the majority of stocks are going up in price. Stocks rise in price by 20% after two declines of 20% each. This is the opposite of a bear market.
Capital Gain The difference between the asset’s cost basis and the current market value.
Cold Storage Storing cryptoassets offline — usually on a USB drive, CD, or computer that is not connected to the internet. Hardware wallets are examples of cold storage. This can potentially be safer than storing cryptoassets in a hot wallet, or one connected to the internet.
Commodity A commodity is a basic good used in commerce that is interchangeable with other goods of the same type. Some examples include wheat, beans, corn, cotton, gold, silver, and copper.
Commissions Fees charged by a broker to buy and sell positions. Commissions vary widely from brokerage to brokerage.
Cost Basis (C/B) The Cost Basis (C/B) is the original value (purchase price) of an asset for tax purposes, adjusted for stock splits, dividends, and return of capital distributions. This number is used to help calculate capital gains.
Crypto The abbreviation of “cryptocurrency.”
Currency A medium of exchange for goods and services. TradeSmith tracks these currencies: USD, CAD, GBP, EUR, and AUD.
Cycle A cycle is an event that repeats itself on a regular basis. Examining cycles in the market can help us time where the market may be going in the future based on past performance.
Daily Gain Percentage The percentage gained or lost from the latest two close dates.

Calculated as: Daily Gain / Total Value.

Daily Gain Total The dollar amount gained or lost from the latest two close dates multiplied by the number of shares.
Days Held The number of calendar days since the position’s entry date.
Decentralized A form of organization which does not require any single party, group, or authority to control services. Cryptocurrencies are decentralized as they do not rely on one central entity.
Decentralized Exchange In a decentralized exchange, all trading is peer-to-peer, and there is no third party matching the orders or holding the funds. Trades are direct, via the blockchain, from one crypto-asset holder to another.
Digital Asset A digital asset is anything that is formatted into a binary source and includes the right to use it. A cryptocurrency is an example of a digital asset.
Distributed Ledger A distributed ledger acts just like a ledger at a bank, but it does not have one central authority with control over it. The distributed ledger is spread across multiple networks and CPUs. These multiple touch points can access and sync the data.
Dividends A distribution of reward from a portion of the company’s earnings that is paid to a class of its shareholders.
Dividends % The percent of dividends earned relative to the listed entry price.
Dividend Yield The dividend yield is the ratio of a company’s annual dividend compared to its share price. It is calculated as follows: Annual Dividend / Share Price. In TradeSmith, it is calculated as follows: Sum of dividends paid for 12 months / latest close price.
Dollar Gain per Share The dollar amount gained or lost from the latest two close prices.
DOW 30 The Dow Jones industrial average measures the stock performance of 30 large, publicly traded companies.
Drawdown A drawdown is the peak-to-trough decline of an investment, fund, or commodity. A drawdown is usually quoted as the percentage between the peak and the subsequent trough.
Encryption In cryptography, encryption is the process of encoding a message or information in such a way that only authorized parties can access it, and those who are not authorized cannot.
Enterprise Value A measure of a company’s total value, often used as a more comprehensive alternative to equity market capitalization.
Entry Date The date the position was purchased.
Entry Price The purchase price per share.
EPS Earnings per share is a company’s profits divided by outstanding shares of a company’s stock. It is calculated as follows: (Net IncomeDividends on Preferred Stock) / Average Outstanding Shares.
EV/EBITDA The EV/EBITDA multiple is a financial valuation ratio that measures a company’s return on investment (ROI). A comparison of enterprise value and earnings before interest, taxes, depreciation, and amortization.
EV/Revenue A comparison of enterprise value to revenue.
Fee Within cryptocurrency, the money paid to process a transaction. Typically, miners are awarded the fee as incentive to speed up transaction times.
Flippening The flippening is the term used to describe a possible turn in the crypto world where an alt coin replaces bitcoin as the biggest cryptocurrency.
Fork Within cryptocurrency, a fork refers to an upgrade to a blockchain network. Forks can be implemented for any number of reasons — disagreements among miners and developers, security, and enhancements. The most famous fork is Bitcoin Cash from Bitcoin.
FTSE 100 The Footsie is an index that tracks the 100 largest public companies by market capitalization that trade on the London Stock Exchange (LSE).
FUD Fear, uncertainty, and doubt.
Gain Percentage Without Dividends (Gain % ex Div) The percentage gain for the position since its purchase that does not include dividends. It is calculated as follows: Gain % ex Div = Total Gain / Total C/B.
Gain Percentage With Dividends (Gain % w/Div) The percentage gain for the position since its purchase that includes dividends. It is calculated as follows: Gain % w/ Div = (Total Gain / Total C/B) + Dividends.
Gain Without Dividends (Gain ex Div) The dollar gain of a position that does not include any dividends. It is calculated as follows: Gain ex Div = Value – Total C/B.
Gain With Dividends (Gain w/Div) The dollar gain of a position that includes any dividends. It is calculated as follows: Gain w/ Div = Value – Total C/B + Dividends.
Gain Per Share Excluding Dividends (Gain/Shr ex Div) The latest closing price minus the adjusted purchase price and does not include dividends. Gain/Shr ex Div = Gain ex Div / Shares.
Gain Per Share With Dividends (Gain/Shr w/Div) The latest closing price minus the adjusted purchase price with dividends. Gain/Shr w/ Div = (Gain w/ Div) / Shares.
Halving When a miner’s proof of work is approved, he or she receives a block reward. Halving is the reduction of the reward after 210,000 blocks are mined.
Hard Commodity Typically natural resources that must be mined or extracted—such as gold, rubber, and oil
Hash Hashing is a method of cryptography that converts any form of data into a unique string of text. Cryptocurrencies use hashing to verify transactions.
Hashrate The hashrate tells you how quickly a block is discovered, and the related cryptography function is solved. Tools like ASIC can shorten the hashrate.
Hot Wallet A cryptocurrency wallet that is connected to the internet. Hot wallets can be subject to security breaches from nefarious users.
Industry The term industry refers to a series of companies that operate in a similar business sphere. Examples of industries: The financial sector can be broken down into several different industries such as banks, asset management, life insurance, or brokerages.
Initial Coin Offering An initial coin offering (ICO) is a means for start-ups to raise capital and bypass the rigorous regulations of venture capitalists or banks. During the ICO, a percentage of the new cryptocurrency is sold to backers in exchange for fiat money or another cryptocurrency, like Bitcoin.
Initial Public Offering An initial public offering (IPO) refers to the process of offering shares of a corporation to the public in new stock issuance.
Input The record on the blockchain of the cryptocurrency someone owns and wants to send to someone else.
Inverted Yield Curve An inverted yield curve is one in which short-term rates are above long-term rates. A “normal” yield curve is one in which long-term rates are above short-term rates. An inverted yield curve is often a sign of an impending recession.
Long or Short (L/S) This is the position type, not the position duration. A long position is a one that you buy and profit from as the price rises. A short position is a one that you sell and profit from as prices drop. The default status in TradeStops is long.
Latest Close The last closing price for which the position trades during the trading session. In TradeSmith, this is adjusted for corporate actions such as dividends, splits, and spin-offs.
Latest Price In TradeSmith, the latest price is updated every 15 minutes for equities; every 30 minutes for cryptocurrencies.
Markets Market refers to the collection of markets and exchanges where regular activities of buying, selling, and issuance of shares of publicly held companies take place.
Market Capitalization The aggregate market value of a company represented in dollar amount. Since it represents the “market” value of a company, it is computed based on the current market price (CMP) of its shares and the total number of outstanding shares.
Maximum Gain % The maximum percentage gain a position has achieved since entry based on the latest closing price or exit price.
Max Profitable Close The closing price of which a position has had its maximum profit since entry.
Max Profitable Close Date The date on which a position had its maximum profitable close.
Miner A user (or users) in the blockchain that confirms a block of transactions. Miners are awarded cryptocurrency for processing transactions.
Mining Rig A computer system used for mining Bitcoins. The computers are used to record information on the blockchain, and miners do this work in return for money.
Minimum Gain % The minimum percentage gain that the position has achieved since entry based on closing price or exit price.
Moving Average A technical analysis technique used to smooth out price action by filtering out noise from random short-term price fluctuations. This helps to identify trend direction. The two most common types of moving averages are simple moving averages (SMA) and exponential moving averages (EMA).
Multiple Purchase Lots Entering the same position on various dates with different entry prices. TradeSmith does not support multiple purchase lots.
Multisig Multisig, or multi-signature, requires more than one signature to approve a transaction. While not required for all transactions, it is a good form of security to utilize. If a company is making cryptocurrency transactions, requiring multisig prevents one employee from having complete control over the transaction. It acts like a form of checks and balances.
NASDAQ The Nasdaq exchange  includes the world’s foremost technology and biotech giants such as Apple, Google, Microsoft, Amazon, and Intel. The term Nasdaq is also used to refer to the Nasdaq Composite, an index of more than 3,000 stocks listed the exchange.
NASDAQ 100 An index basket of the 100 largest, most actively traded U.S. companies listed on the NASDAQ stock exchange. Numerous industries are included like retail, biotechnology, industrial, technology, health care, and others. In Ideas by TradeSmith, we are tracking the NASDAQ 100 under market health.
Nikkei The Nikkei is short for Japan’s Nikkei 225 Stock Average, the leading and most-respected index of Japanese stocks. It is a price-weighted index comprised of Japan’s top 225 blue-chip companies traded on the Tokyo Stock Exchange.
Net Income The total earnings of the company. It is calculated as sales minus cost of goods sold, selling, general and administrative expenses, operating expenses, depreciation, interest, taxes, and other expenses.
Node Any computer that connects to the Bitcoin interface may be considered as a node in the sense that they communicate somehow with each other. The network of computer nodes is what makes it possible for Bitcoin to be used as a decentralized peer-to-peer (P2P) digital currency.
Normal Yield Curve A normal yield curve is one in which long-term rates are above short-term rates.
Output The public key of the receiver of a cryptocurrency.
P/B Price-To-Book. This is a ratio that compares a company’s market capitalization to its book value. It is calculated as follows: Current Closing Price / Latest Quarter’s Book Value Per Share.
P/E Price-to-Earnings. This is the ratio for valuing a company that measures its current share price relative to its per-share earnings. It is calculated as follows: Market Value per Share / Earnings per Share (EPS).
PEG Price/Earnings to Growth. The PEG ratio is used to determine a stock’s value while also factoring in the company’s expected earnings growth. It is calculated as follows: P/E Ratio / Percentage Growth Rate.
Public Address A Bitcoin address is a unique identifier that serves as a virtual location where a cryptocurrency can be sent.
Peer-to-Peer (P2P) A group of devices that collectively store and share files. Each participant (node) acts as an individual peer. Typically, all nodes have equal power and perform the same tasks.
Private Key A private key, also known as a secret key, is a variable in cryptography that is used with an algorithm to encrypt and decrypt code. It will be paired with a Public Key for transactions. Never share private keys with others.
Proof of Stake An algorithm in which a person is chosen to mine or validate block transactions in a pseudo-random way based on the user’s wealth. This requires less computational work than a standard proof-of-work system.
Proof of Work (PoW) In blockchain, this algorithm is used to confirm transactions and produce new blocks to the chain. With PoW, miners compete against each other to complete transactions on the network and get rewarded.
Public Key The record of the cryptocurrency that someone owns and wants to send to others. Nodes and Miners will see the Public Key. It will be random sequences of letters and numbers that function similarly to an email address.
QR Code QR code (abbreviated from Quick Response code) is the trademark for a type of matrix barcode (or two-dimensional barcode) first designed in 1994 for the automotive industry in Japan. In cryptocurrency, QR codes can be generated for a public address.
Revenue The income generated from normal business operations and includes discounts and deductions for returned merchandise. It is the top line or gross income figure from which costs are subtracted to calculate net income.
Russell 1000 The Russell 1000 index, a subset of the Russell 3000 index, represents the top 1,000 companies in the United States.
Russell 2000 The Russell 2000 index is an index measuring the performance of approximately 2,000 small-cap companies.
S&P 400 A Standard & Poor’s mid-cap index, this represents those stocks with market caps of at least $1.4 billion to $5.9 billion.
S&P 500 Also known as the Standard & Poor’s 500 index, contains 505 stocks issued by 500 large companies with market caps of at least $8.2 billion.
S&P 600 A Standard & Poor’s small-cap index, this represents stocks with market caps of $300 million to $1.4 billion. It tracks a broad range of small companies that must reach certain liquidity and stability requirements.
Satoshi Nakamoto The name used by the presumed pseudonymous person or persons who developed Bitcoin, authored the Bitcoin white paper, and created and deployed Bitcoin’s original reference implementation.
Satoshi The smallest unit a Bitcoin can be broken into. One satoshi is 0.00000001 Bitcoin.
Scrypt Scrypt is a password-based key derivation function. This special function, algorithm, makes it hard to perform hardware attacks. A simplified version of it is used by the Litecoin network to confirm transactions on the blockchain.
Sector Sector refers to a part of the economy in which a great number of companies can be categorized. An economy can be broken down into about a dozen sectors, which can describe nearly all of the business activity in that economy. TradeSmith tracks these sectors: Consumer Staples, Consumer Discretionary, Communication Services, Information Technology, Health Care, Industrials, Utilities, Materials, Energy, Financials, and Real Estate.
SHA-256 SHA-2 (Secure Hash Algorithm 2) is a cryptographic hash function used to run operations on digital data. The computer hash (output) is compared to a known and expected hash value to prove the data’s integrity. SHA-256 is a novel, 32-bit hash function used to prove the integrity of Bitcoin transactions.
Shares Shares are units of ownership interest in a corporation or financial asset that provide for an equal distribution in any profits, if any are declared, in the form of dividends. The two main types of shares are common shares and preferred shares.
Shares Outstanding Shares outstanding refers to a company’s stock currently held by all its shareholders, including share blocks held by institutional investors and restricted shares owned by the company’s officers and insiders.
Simple Moving Average (SMA) An arithmetic moving average calculated by adding recent prices, usually close prices, and then dividing that by the number of time periods in the calculation average.
SMA (10) The 10-day simple moving average. Calculated by adding the closing price of the last 10 trading days and dividing by 10.
SMA (50) The 50-day simple moving average. Calculated by adding the closing price of the last 50 trading days and dividing by 50.
SMA (200) The 200-day simple moving average. Calculated by adding the closing price of the last 200 trading days and dividing by 200.
Smart Contract A smart contract is an agreement that is stored on the blockchain. For the contract to be executed, certain criteria need to be met — just like a physical contract. Once the smart contract is signed, it cannot be altered.
Soft Commodity Futures contracts where the actuals are grown, rather than mined or extracted. A soft commodity could be coffee, cocoa, sugar, or fruit, for example.
Spider (SPDR) Spider (SPDR) is a short-form name for a Standard & Poor’s depository receipt, an exchange-traded fund (ETF) managed by State Street Global Advisors that tracks the Standard & Poor’s 500 index (S&P 500).
Stablecoin A stablecoin seeks to reduce the volatility in the crypto market by acting as a store of value for the crypto asset. An example of a stablecoin is Tether.
Stocks Stocks are an investment in a company and that company’s profits. Investors buy stock to earn a return on their investment.
Symbol A stock symbol is a unique series of letters assigned to a security for trading purposes. Also known as ticker symbol.
Time-Cycle Analysis In time-cycle analysis, we are less focused on the exact price the amplitude may predict. Instead, our focus is knowing that a top or a bottom may be coming. This pertains to our Timing by TradeSmith product.
Total Assets The assets owned by the entity that have economic value with the expectation that they will provide a future benefit.. This can include cash, investments, furniture, fixtures, equipment, receivables, intangibles, and any other items of value owned by the company.
Total Cost Basis (C/B) The original amount of money, adjusted for corporate actions, put into an investment before any growth or loss. This includes the initial investment as well as fees and commissions. It is calculated as follows: (Adjusted Entry Price * Shares) + Brokerage Commission(s).
Total Dividends The total of all dividends received by an investor for tax purposes. In TradeStops, total dividends will be tracked based on a user’s listed Entry Date.
Total Supply The total number of coins or tokens that are in existence (minus any coins that have been verifiably burned, aka made unspendable), including those circulating in the public market and those that are locked or reserved.
Trading Pair A trading pair tells you which currencies are being traded against each other. The first currency of the pair is the one that you are trying to buy or sell. Your trades would then be denominated using the second currency.
Trailing Stop A trailing stop is a stop order that can be set at a defined percentage or dollar amount away from a security’s current market price. For long positions, the stop would be below current market price. For short positions, this would be above current market price.
Transaction The InputAmount, and Output for a cryptocurrency that will be processed on the blockchain. Once a transaction is processed, it cannot be reversed.
Trigger Price The price at which a stop, or alert in TradeStops, would trigger for the position.
Units Amount of ownership in a cryptocurrency.
Volume The number of shares of a security traded during a given period of time. Every transaction that takes place between a buyer and a seller of a security contributes to the total volume count of that security.
Yield Yield refers to the earnings generated and realized on an investment over a particular time period. It’s expressed as a percentage based on the invested amount, current market value, or face value of the security.